Minister & Deputy Minister of Communications progress report on commitments made to Portfolio Committee: November 2013 to January 2014

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Communications and Digital Technologies

18 February 2014
Chairperson: Mr S Kholwane (ANC)
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Meeting Summary

The Minister and Deputy Minister of Communications presented a progress report on the commitments made to the Committee, covering the period November 2013 to January 2014. In summary, the commitments and achievements included:
- ensuring a more effective Department of Communications (DOC) was attended to by appointing three new Deputy Directors General, a Chief Financial Officer, Chief Directors of human resources and audit management and 58 non-senior management service staff 
- achieving a less fragmented and less fractious ICT sector was work in progress, and meetings were arranged with numerous stakeholders and reviewing its strategy
- finalisation of the Broadband Policy, Strategy and Plan was progressing, with the new broadband policy gazetted on 6 December, and an inter-departmental steering committee would meet shortly, and a Broadband Council would be appointed
- Spectrum policy was focusing on alignments between the  open access model and the general Broadband Policy
- The new policy directive on transparent pricing had been held back pending finalisation of the Mobile Termination Rate by the Independent Communications Authority of South Africa (ICASA). The regulations were gazetted but, due to the MTN challenge, they would be deferred to May. Pricing workshop results would be incorporated in the plans
- Sentech had managed to provide 83.7% of the country with network for rollout of Digital Terrestrial Television, and 16% of the rest would be covered by the satellite platform. A brief description was given (supplemented by another presentation later in the morning) on the attempts to facilitate and broker an agreement between the service providers, but it was apparent that they would not compromise or reach agreement. The Ministry thus decided, with input from the Department of Trade and Industry, that the Set Top Boxes (STBs) would include a control system, but that broadcasters would be free to choose whether to use it or not; if they did, they would have to pay. A brief description of the essence of the eTV court judgment was given and it was emphasised that this was not about connectivity, but a broader trade and economic issue. Government was still keeping the doors open, and the Committee was urged to make proposals that could bring the parties closer
- The schools connectivity project was showing great strides, with 566 schools connected since December 2013, bringing the total connected schools, through industry and DOC initiatives, to 8 268. By March all schools should have end-to-end solutions
- South African Post Office (SAPO) was not doing so well, still beset by challenges around the strike, but the Minister took responsibility for what he described as “mediocre” performance by DOC on increasing the points of presence. SAPO reported on the cause and attempts to settle the strikes. 
- The National Address System had delivered over 392 971 post and addresses. A steering committee was guiding the various departments’ roles and a concept paper was developed.

- Shareholder compacts were finalised for SAPO, Sentech and the SABC, and the board of .za Domain Name Authority should be appointed shortly. An investigation into SAPO by the Special Investigation Unit had begun, and another investigation was being done into the Universal Services and Access Agency (USAASA), whose board had rejected an earlier forensic report.  This should be finalised within the next ten days
- A list of potential board members for Postbank had been submitted to the Registrar of Banks and the processes for its licensing were ongoing
- The National Integrated ICT policy on the Green Paper was gazetted for public consultation on 24 January, and public engagement was to commence in early March, with the date for comment running until end March.
- a new Community Broadcasting Support Policy was developed
- under the legislative programme, four bills had been presented and processed
- the new Kiamva National e-Skills Institute would be launched on 21 February, with funding of R15 million already secured, and partnerships with local universities for hosting

Members asked SAPO to detail the reasons for strikes, how agents were to be integrated,  what negotiations were done, wondered if management was caught off guard, whether it was being honest with the unions, and stressed that SAPO must prove that its services were still relevant. They asked if government was using SAPO as preferred courier, wondered how SAPO would remain viable and whether the premises it was using at various points were appropriate. They requested a provincial breakdown, asked how SAPO would be integrated with the broadband rollout plan and whether Eskom was included in the National Address Team.

Discussions also included a short session on the MTN challenge to the ICASA regulations, and the role of the Ministry in relation to State Owned Companies and ICASA. This was taken forward again when debating what the Ministry could do at this point in relation to the Public Protector's report on the SABC.

Members heard a brief update on the SIU investigations into the SABC, which highlighted that under the terms of office of two past boards there had been various irregularities. The current Board was exonerated from responsibility. Members unanimously expressed their dissatisfaction that this report contained nothing new, urged the Minister to ensure that stringent actions were taken, questioned the involvement and role of Bokwa Attorneys (appointed by the Board), and wanted more specifics of exactly how the cases were being followed up, and, if the SIU was unable to do so, said that the SABC should be pursuing them. The Ministry wanted to make it clear that it was not running away from its responsibilities, but stressed that there were some issues that fell for action by the Board, specifically those relating to employees and employee discipline, including the several instances of overstepping the delegated authority framework, qualification to hold positions and fruitless and irregular expenditure. The Ministry would have to deal with issues involving the Board. The Minister gave a commitment that, by end March, if possible, and depending on the legal advice, he would give another report; if that was not possible then it would be delivered prior to the election. Whatever the DOC and Ministry could do legally, they would commit to doing. An exit report advising the incoming executive to take the matters further would be written. Within the next 14 days, he would meet with the SABC Board, Bokwa Attorneys and the SIU to clarify the roles.

Another short presentation was given on digital migration, reiterating the policy stance, the STB controls, the reasons why this policy was adopted, the emphasis on stimulating the economy, black entrepreneurs and local content. Questions were deferred to the following day.

The minutes of 14 February were debated extensively, being adopted by the ANC members present but the DA and COPE noted their objection as they considered that the Committee’s concerns about the lack of skills at the SABC were not properly captured. Members felt that the standard of minutes left much to be desired.    

 

Meeting report

Opening remarks
The Chairperson welcomed the Minister of Communications, the Deputy Minister and the team from the Department of Communications (DOC or the Department). He especially welcomed the three newly-appointed Deputy Director Generals and noted the appointment of a new Chief Financial Officer (who was not present at the meeting).

Progress on Undertakings to Committee, November 2013 to January 2014: Report by Minister of Communications:
Mr Yunus Carrim, Minister of Communications, noted that the slide presentation outlined the issues that had been agreed upon, on 20 August 2013, as needing further attention by the Department and Ministry of Communications, and also reminded Members that he had given one progress report on 5 November 2013. The current report covered the period 5 November 2013 to 31 January 2014. Many of the matters were ongoing and would continue to be reported on in the next term of Parliament.

The first commitment related to ensuring a more effective DOC. The three new Deputy Director General positions had been filled, and the Chief Financial Officer, and Chief Directors of Human Resource Management (HRM) and Internal Audit and Risk Management had started in January 2014. Seven more interviews had been processed. 58 non Senior Management Service (SMS) positions were advertised. The Ministry had more or less finalised what it set out to do in this regard. Migration of both SMS and non-SMS staff had been done, into the revised organisational structure. He would be sending letters to around 60 staff in the following week. The integrated action plan based on the Auditor-General’s report had been activated.

Slide 5 related to the aim to achieve a less fragmented and less fractious ICT sector, and this was work in progress. There were many “battles” in the market place, about market audiences, but despite the differences there should be a framework. The Minister and Deputy Minister had met 191 organisations and individuals since 12 July 2013, which was a substantial number. The DOC stakeholder strategy was being reviewed to try to have more proactive stakeholder engagement.

The objective of finalising the Broadband Policy, Strategy and Plan showed good progress. The broadband policy was gazetted on 6 December, having been approved by the Cabinet. An executive summary and the full plan had been sent to Members. The inter-departmental steering committee was activated and would meet within the next three weeks. A Broadband Council was to be appointed. Since launching the broadband policy, schools, clinics and hospitals would be providing the impetus for the collective broadband. 565 schools had been connected since 4 December 2013.

Ms Stella Ndabeni, Deputy Minister of Communications, reported on the Spectrum Policy, which was intended to facilitate the development of wireless technology in support of universal access and economic development. She reminded the Committee that the Ministry had commissioned a Digital Dividend Study whose results would feed in to the digital dividend spectrum. In the last year there had been more focus on the economic side of the spectrum but there was now more emphasise on the open access model. Further reports would be brought to the Committee. It was necessary to align the draft Spectrum Policy to the open access model and the general Broadband Policy.

The Minister reported on the work done in regard to the new policy directive on transparent pricing, but reported that the Department had been waiting for the finalisation of the Mobile Termination Rate (MTR) by the Independent Communications Authority of South Africa (ICASA), before taking forward the policy directive. ICASA had released the final regulations and gazetted them on 4 February. They were supposed to take effect from 1 March 2014. However, given that MTN had now challenged the process, this had been deferred to May, and he would report more fully later. The pricing workshop would be incorporated in plans.

Slide 10 set out the progress on the aim for Sentech to provide 84% of the country with network for roll out of Digital Terrestrial Television (DTT). The DTT network now covered 83.7% of the population. 16% of the remainder would be covered by the satellite platform. The programme for public awareness continued but it would escalate once the problems with the set-top box control issues were overcome.

The Minister then provided more background and an update on the commitment to convene a facilitation process to bring together the parties to read agreement on the set top boxes. Cabinet adopted a policy, which was gazetted on 6 December. Basically, that policy stated that broadcasters could be free to choose whether they wanted to use the control system or not. The Set Top Boxes (STBs) would include a control system, for a variety of reasons linked to industrial policy, including protection of the local electronics industry, create space of emerging entrepreneurs, avoid delays that would be caused by changing Bureau of Standards standards, and minimise legal actions that were threatened on both sides. The broadcasters had been unable to agree on whether control systems should be included, and despite the Minister and his predecessor trying to broker agreements, there was no prospect that this would succeed. From mid October to late November there were further negotiations with the Department of Trade and Industry (dti) and finally government took a decisive stance that controls would be included, that the broadcasters must choose whether to use them, but if they did, they would have to pay. The policy had been in place since the ANC’s Polokwane Conference, to encourage competition in the pay TV sector. The Department was neither naïve nor reckless. It had obtained a legal opinion from Senior Counsel three weeks previously. The judgment in the court case brought by ETV said that it was not for the Ministry or Department to decide who the vendor or supplier must be, in what form and how it should be operated. The policy was now open, and had been gazetted. However, the DOC still felt that there was need to try to bridge the gaps so there would be ongoing attempts to try to reach agreement, for the good of the country. There was a need to release spectrum, and to ensure that mobile operators did not use, as an excuse, the high cost and say that they could not reach the rural areas. He emphasised the need to create 23 500 jobs, which were needed for economic growth reasons. A 10% increase in broadband would lead to huge economic increase. The world was being reshaped through ICT. The digital divide was not between the developing and developed world, but between individuals, according to whether they had mobile connectivity. Cellphones also had huge potential to create jobs. The Ministry was pleading with the stakeholders to work seriously on the issues. Both the National Development Plan (NDP) and New Growth Path spoke of the knowledge economy. Whilst operators would continue to fight for market share and profit, they must also try to come together. Government was keeping the doors open, and he was not sure what more it could do, although he would be very pleased if the Committee – or indeed any other stakeholders – could come up with any ideas to bring the parties closer. The Ministry would not like to proceed to take a rigid stance unless it absolutely had to.

The Deputy Minister added that at some point the Ministry must get government policy implemented, and the responsibility did lie with the DOC who may have to take a decision, but urged again that all the parties should voluntarily come on board.

She then reported on the schools project, which she was spearheading. In 2010 there was money made available to connect Dinaldei schools and 1 650 schools were identified for connection. The decision to merely provide connectivity was then reviewed, and instead of doing this alone it was decided to develop a framework to provide end to end total solutions. There had been connection of 566 schools since adoption of the broadband policy in December 2013. Not only DOC, but also other parastatals played a role in the connection process.  To date, 8 268 schools in total had been connected through government and industry initiatives. Schools were entitled to a 50% discount from the operators, and 4 900 of the schools had benefited from this e-rate. 268 schools had end to end connectivity solution. Equipment had been delivered also to other schools. A commitment was made that by March all would have end to end total solutions.

The Minister said that this was a prime example of one project that had gone further than anticipated and produced concrete delivery, and he invited the Committee to do oversight and see the significant achievements. To have connected 565 schools over six to eight weeks was really positive.

In relation to South Africa Post Office (SAPO), he admitted, however, that matters were not going so well, and the Ministry would be lying to itself if it claimed otherwise. It was not entirely due to SAPO, as the Ministry itself could have made better progress. He personally had misunderstood, at the previous meeting, what “points of presence” meant. The Ministry did exercise oversight over SAPO and he took full responsibility for what he termed “mediocre” performance. By the 2014 elections, SAPO should have built 50 new post offices, focusing on under serviced and rural areas. A schedule of the composition was given on slide 13.

There had been better achievement in relation to the project on the National Address System, with delivery of over 392 971 post and addresses. A steering committee was guiding the various departments’ roles and a concept paper was developed.


Another undertaking related to the need to provide clearer shareholder compacts and exercise more stringent oversight over the State Owned Companies (SOCs). Shareholder compacts of SAPO, Sentech and SABC were all finalised. The nine board members of .zaDNA were to be appointed shortly. He listed the appointments to the boards of Sentech and SAPO. The SAPO strike was largely ended. He explained that the strike action was linked to overall structural problems in SAPO, due to withdrawal of the government subsidy and other legacy issues. The Special Investigating Unit (SIU) investigation into SAPO had begun. A further investigation in the Universal Services and Access Agency (USAASA) was being processed, following the draft Gobodo forensic report, but the Chief State Law Adviser had confirmed that there was no legal basis on which the Ministry could have forced the Board to act, having rejected the findings contained in the draft report, although it had tried an informal process. The further investigation would be finalised within the next ten days, and both the Board and Ministry wanted it settled. Second quarter reports had been presented and analysed, and discussions held with the entities on them, and the third quarter reports process would follow by end February.

The Minister then turned to the commitment to finalise licence issues and appoint Board members to the Postbank. The lists of potential board designate members was sent to the Registrar of Banks, but the Minister of Communications had no control over the time frames. A cooperation agreement was developed and approved by the SAPO board. The South African Reserve Bank was dealing with the application to start a bank. R481 million was allocated by National Treasury, but it would not be sufficient.

In regard to the undertaking to finalise a national integrated ICT policy on the Green Paper, the Minister noted that this was gazetted for public consultation on 24 January 2014. The consultation period had been extended to 24 March, and public engagement would commence on 2 March 2014, with a National Consultative Conference, followed by nine provincial hearings also. The National ICT Forum would follow, on broadcasting policy

The Deputy Minister spoke to the commitment t finalise a new Community Broadcasting Support Policy,and said that a draft had been developed and would shortly be published for public comment.  Part of the historic challenge was lack of support to community stations from the DOC. Although it had provided infrastructure, the question was raised whether it had actually assisted them to be “eyes and ears” on the ground, whether it had helped them resist the temptation of buy-out from the larger owners, or influence over content. The new strategy aimed to address these points. Infrastructure was provided to four community stations (see attached presentation, slide 20) and seven more would be receiving similar support in the second quarter of the 201415 financial year. She urged Members to communicate this to their constituencies.

The Deputy Minister noted that, under the legislative programme, four bills had been introduced and were either already finalised (with the SAPO and Postbank Bills already enacted) or were still in the process (Electronic Communications Amendment Bill and ICASA Amendment Bill). She thanked the Committee for its continued support on those Bills, and Members’ input was much appreciated as part of delivering quality services.

Arising from both the budget vote and NDP, the eSkills Institute was to be merged with NEMISA and the Institute for Software and Satellite Application (ISSA). The new Kiamva National e-Skills Institute (eSI) would be launched on 21 February. Funding of R15 million was secured and had already been transferred to NEMISA. Discussions had been concluded with 12 key government departments to finalise an audit of current approaches. There was a  partnership with local universities, and eSI would be hosted by six local colleges.

The Minister concluded that the Department had tried to deliver on what it had committed to, and where it had not managed to reach the target, reasons had been provided. He called upon the Committee to provide leadership and oversight, and challenge the targets, where necessary. The Committee should  join the Ministry as it moved South Africa forward.

The Minister asked for an opportunity, finally, to table a brief report on the Special Investigating Unit investigations into the SABC.

Discussion
The Chairperson thanked the Minister and Deputy Minister for their progress report, and suggested that perhaps the matters should be questioned in turn, with some to stand over to the following day.

Ms M Shinn (DA) agreed, and asked what would be covered at what time.

The Chairperson suggested that the SAPO matters should be dealt with, the SIU investigations into the SABC, and digital migration, at least, to allow the relevant officials to leave when these were finalised.

SAPO issues
Mr A Steyn (DA) asked whether the officials should perhaps report firstly on the strikes and what was done, to allow the questions to be more closely focused.

Ms R Lesoma (ANC) asked to be reminded of what had been said, last year, about integrating agents as she recalled that some workers at SAPO were not actually employees. There was also an issue raised about doing projections on the budget. She asked how far that process had gone. She asked what triggered the strike, whether the strike involved all employees, what negotiations had been done, and how far SAPO had gone to resolve the issues. She also wanted to know what the SAPO strategic plans were, in relation to communication. Finally, she asked how the SAPO intended to deal with the issues.

Mr Steyn also wanted to know about the ongoing strikes. There had been at least six to eight over the last 24 months. Every time, management appeared to be caught off guard. There was not adequate communication from management to customers. Management would claim to have reached agreement, after every strike, yet after a brief lull, another would flare up again. He said that after the last strike, for instance, management claimed that an amicable agreement was reached, but the unions were saying otherwise, which seemed to suggest that strikes could again intensify. He asked if management, firstly, understood what the strike was about. If it could not meet the demands, then he wanted to know if SAPO was being honest with the strikers and unions, or whether it was promising things that it could not do. He pointed out that recurrent strikes impacted quite sharply on the economy, as many businesses were still relying on the services of the post offices. He feared that if SAPO was not serving their needs, they would start looking at other avenues, which would, in turn, have an impact on the income of the SAPO.

The Chairperson asked government which courier services government was using – SAPO or another private company.

Ms J Kilian (COPE) stressed that this was why the service had to be reliable, and highlighted the need to get assurances that couriered parcels would be delivered. She said, in regard to the Minister’s comment that where credit was due she was happy to give it, but there was ample room for improvement in relation to SAPO.

She linked her questions on SAPO to Mr Steyn’s question on the root cause of industrial action at SAPO. She appreciated the Minister’s response that there were postal points, not necessarily full post offices and agreed it was important to differentiate. She wondered how, given the budgets and the need to retain a viable business model, SAPO would remain viable, in the face of  reduced budgets and the move to electronic communication. She wondered whether it was really necessary for some of the SAPO offices to be based in expensive malls, such as the one in Canal Walk, or whether it needed such large premises. This created the impression that SAPO was making a lot of money and that might well make the lower echelons of employees feel exploited. If rental costs could be curbed, there would also be more to divert to other areas, to achieve a more affordable model. As the number of postal points expanded, the budget would have to be balanced elsewhere.

Ms A Muthambi (ANC) questioned the provincial breakdown of the established post offices on slide 13. She asked if there was a plan to integrate SAPO with the broadband rollout plan, particularly in the rural areas. In relation to the undertaking to deliver post and addresses, she asked if Eskom was part of the National Address Team. She also wanted more information on slide 15 and other shareholder compacts.

Ms M Morutoa (ANC) repeated the questions asked previously on SAPO. From the 2012/13 financial year, there was no further subsidy paid to SAPO, which was of concern to her because SAPO was so important in the under-serviced areas. Allocations to SAPO were low in relation to the high demand. She noted the comments about challenges from sophisticated networks, but felt that post offices still provided a vital service, particularly for delivery of parcels. She also wanted to know what was being done about competition, to improve the network. She commented that the post office in Parliament desperately needed to be refurbished.

The Minister said that it was quite correct that the strike could not be reviewed outside of the structural and financial issues. The SAPO did need to modify its approach in light of the digital age, where ordinary mail was no longer the main source of communication. DOC had been engaging with National Treasury (NT) about the subsidy but that would not solve the problem in a time of extreme austerity. He had spoke t to the Minister of Finance twice about support challenges. NT had asked why SAPO could not manage what it had, more effectively, in order to make out a case for more funding. Department of Basic Education (DBE) had recently shown how delivery of textbooks by SAPO in two provinces had been very successful. In the digital age, it could also play a much greater role in connectivity. The Minister of Social Development had said to him that the Post Office could also serve to deliver social security grants, and he reminded Members that there was currently some legal challenge around the current tender. He fully agreed that state entities – and indeed the whole country - should be using the Post Office. It was fundamental to a developmental state. It had an infrastructure unmatched by any other structure, private or public. He suggested that further investigations should be put on the agenda by the Committee, and an interactive process followed. The more efficient SAPO’s board could be, the more likely it was to secure more funding from NT to enhance it still further. SAPO should not be abandoned and he urged the Committee also to lobby for funding and perhaps meet with the Chairperson of the Standing Committee on Finance.

He added that in September the Minister had given an instruction to use SAPO as the courier service for all entities, unless for isolated and special instances. This meant, concomitantly, that SAPO must prove itself capable of delivery. From the next administration, he hoped that Cabinet as a whole would use the SAPO. He asked the Director General of the DOC to ensure that, when the boards of SABC and the others were visited, all SOCs must be urged to use the SAPO. Finally, he apologised that the provincial breakdown had not been provided as it should; he would ensure that a copy was distributed on the following day.

Mr Sibongile Makopi, Deputy Director General: State Owned Enterprises, DOC, said that as part of looking at the institutional arrangements for the DOC, the role of SAPO would be investigated also. The public sector was targeted for rollout.

Mr Themba Phiri, Deputy Director General, DOC, said that the stakeholders’ committee had a policy making function. Eskom was not included as yet, although the DOC was trying to include the Departments of Public Enterprises and of Mineral Resources to guide the committee on how Eskom could play a role.

Ms Rosy Sekese, Director General, DOC, commented on the undertaking for addresses. Statistics SA had noted that some houses went under about four different numbers, according to whether they were on Telkom, Eskom or municipal lists. The purpose of this exercise was to rationalise so that each dwelling had one address. Not only was this important for communication, but also for security, such as ensuring that ambulances could be called to the right place. There was consideration into how the postal addresses, once allocated, could be used.

The Deputy Minister added that DOC had taken a decision – and it was also covered in the NDP – that SAPO should be taking a broader role. It would be necessary to bring together the existing infrastructure – such as existing post offices and Telkom – and consolidate them. After everyone had been brought together, a rollout plan must be created. She emphasised that there must be proper rationalisation as new jobs should not be created at the expense of existing ones.

The Minister added that on 18 and 19 December there was a workshop with SAPO on how to have successful post offices. There was no intention to privatise the post offices, and the post offices must belong to the people. Experiences in other countries were useful for they could illustrate how those countries’ post offices survived despite being more digitally-oriented, and he suggested that a report on this must be provided to the incoming Committee. The Executive had oversight on the SOCs and it should be telling Parliament of the outcomes. He said that there were some functions of the executive that rightly “belonged” with the executive, in the sense that Parliament could oversee, but not micro-manage. He believed that this was a matter of public interest and he urged the Chief Executive Officer, SAPO and Director General of Communications to ensure that they reported to Parliament, so that it could give further guidance to the incoming Minister.

Ms Kilian repeated her question whether it was viable for the SAPO to retain some of the offices where they were presently situated.

The Chairperson said that this was an operational, rather than a strategic issue.

Mr Christopher Hlekane, Group Chief Executive Officer, SAPO, said it would be important to give some background to the strike. The biggest challenge lay with temporary staff at minimum wage levels, and how they might be integrated into the staff base, and the cost of doing that. In August 2012 SAPO had committed to eliminating temporary contracts and had then placed a number of people on 12-month contracts, which had resulted in an improvement in their take-home pay. At the end of that period, there was still no conclusion on how to assimilate staff but consideration was given to setting up a “pool” from which people with skills could be drawn. Around 1 517 of the former 7 000 temporary staff were converted to “permanent part-timers”, and this was done in stages to try to balance the costs. The incremental cost was around R13.7 million, and it was impossible to deal with all of them simultaneously. The expectation was created – which led to the strike – that all employees would be converted to permanent staff, but that was impossible as it would cost R300 million. SAPO had to engage with the unions further, but another dilemma was that some of the striking workers were not part of the recognition agreement with the two unions, so that any negotiations with them were conducted individually, rather than through organised labour, and there was disconnect between them and the unions. SAPO was still trying to reach final agreement and ensure that processes in future would integrate with the discussions in the environment, otherwise it would be indirectly recognising another body. There were 14 days now to resolve the issue. The indicators were that there would not be a continuation of the strike action.

Mr Hlekane said that there had indeed been plans and the strikes did not take management by surprise. However, he repeated that a balance had to be found between the negotiations and the costs. SAPO was financially challenged.

Mr Hlekane believed that the SAPO model was indeed sustainable and that there were plenty of opportunities for it. It was already growing the e-business, including bill payments, which had doubled since the last year. Its strength would depend on how it looked at the platform of distribution and support, digital migration and how track and trace could be extended to other projects. The property portfolio presented opportunities whether to be part of the broadband from a marketing and revenue point of view. The current status could be enhanced to improve the balance sheet. It might be able to use the portfolio to borrow. In so far as the outlets were concerned, he said that SAPO was aware of the need to find optimal balance between urban and rural areas. ICASA had defined where SAPO needed to be and how to look at the standards and needs to balance urbanisation and rural requirements. There would always be opportunities for other services and there was a focus on that now. The workshop had assisted in bringing forward reports, and they were incorporated into the corporate plan.

The Chairperson wanted to explain to Members at this point, before anyone decided to challenge it, that participation by other officials of the DOC was being allowed, at the request of the Minister, although it was primarily the Minister’s briefing.

The Chairperson felt that the strategy was very important. The 1998 White Paper on postal issues was quite clear on how the country would move forward. He hoped that the ICT Panel would also give input. This would be enhanced by the Workshop and he hoped that the three processes would be considered in combination to come up with one clear strategy. He congratulated the Minister on the speed with which he had appointed the SAPO board. He hoped that the SIU investigation into the post office matters would help to deal with the difficult issues.

Ms Lesoma asked whether it was correct that there had been missing assets, and asked if they were movable or fixed assets, and what the financial implications were. She had heard, through the media that ICASA was apparently being challenged in court, and she asked by whom, and for what. Finally, she wanted to comment on the oversight function and reminded the Minister that the DOC was well resourced in terms of technical resources and advisers, and should play a more active role in getting information out.

Mr Carrim responded that the SIU would be looking into the allegations, including that of assets missing but at this stage there was nothing specific other than certain individuals’ participation.

Mr Carrim spoke to the ICASA challenge and said that in South Africa it was regrettable, and surprising, given that South Africa had negotiated one of the “most astonishing” settlements in 1994, that people tended to rush to court. He believed that the matter had been launched by MTN, but Vodacom, although stating that it might join in the issue, had not yet, perhaps because it was waiting to see what MTN did. DOC would have preferred the parties to try to negotiated around the issues raised in the ICASA regulations, but it was MTN’s right to sue if it wished and this could not be prevented. The current leadership of DOC was clear on its role and not afraid of rigorous and effective oversight. The only way for any department to improve was to subject itself to oversight. He fully agreed that Parliament and Minister had complementary roles and welcomed stringent oversight.

Ms Morutoa quipped that the Minister would always bounce back what was thrown to him. She wondered if ICASA had followed due process.

The Minister said that this was an excellent question. ICASA was appointed by Parliament, so the Ministry had limited control over it as an independent authority. His understanding was that ICASA did not feel that the termination rates were wrong. It did not want any undue delays to arise through disputes on process and procedure. According to ICASA, it had fully complied with due process, but MTN was disputing this. It was important that regulators did abide by all necessary steps to reach their end point, and he would have hoped that ICASA would have been scrupulous about observing the process.

SIU’s investigations into the SABC
The Chairperson said that the Minister, during his presentation, had noted that there was a report from the SIU on the SABC matters, and he suggested that this could be presented now, since the Committee had earlier agreed what items would be considered first.

Ms Morutoa referred to the Chairperson’s earlier remark that perhaps some officials may need to leave, but made the point that when people were to speak to Parliament, they must ensure that they stayed to the end, as MPs could be inconvenienced if they were unable to answer questions.

The Minister wanted to give some background. A while ago, Members had raised questions to him as Minister, and he had suggested that certain issues be dealt with in a closed meeting, to avoid names of individuals being aired. The report had been revised, because the references to names had been removed, referring to the cases by number only. The Ministry was not running away from the issues, despite what the media may have suggested.

Ms Shinn noted that the names were already a matter of Parliamentary record, because the SIU, reporting in November 2012, had already given a whole table, with names. This was not a witch-hunt; the Committee’s main concern was in getting updates and in ascertaining whether certain people had been charged.

The Minister agreed that if a person was invited by the Committee, it would be acceptable to release the names but not all the issues now raised were directly on the agenda.

SIU and DOC reports into SABC matters
Mr Sibongile Makopi, Deputy Director General, DOC, tabled some slides about the SABC investigation, although many of them were not shown or explained during his presentation. He highlighted that there were  a few slides about the SIU investigation, which he did not present. He highlighted that there were two streams of work to be done and the SIU was basically highlighting the cases in which criminal charges were considered competent. Other issues would remain to be dealt with by the SABC Board. He noted that the SABC had also referred some matters to other authorities such as the National Prosecuting Authority (NPA) or Specialised Commercial Crimes Unit (SCCU). Slides 3 onwards set out the criminal matters. There were nine cases investigated by the SIU, of which one related to international acquisitions and contracts that were entered into, whilst there were other cases involving abuse of powers. Those nine cases were referred to the Brixton Police Station by the SIU. Mr Madipya would later explain how those would be taken forward.

Slide 6 set out instances of fruitless, wasteful or irregular expenditure investigated by the SIU: It was important to note that during the time of investigations – 2006 to 2008 - there were two SABC boards . Some of the findings would relate to either one or the other.

Slide 7 noted that the quantum of money expended in fruitless and wasteful ways was R9.6 million fruitless expenditure, and R275.6 million irregular expenditure. The main cause of the latter was lack of adherence to, or disregard of Public Finance Management Act (PFMA) policies and delegation authority frameworks. The SIU had found that the Board failed to meet its obligations under section 51 of the PFMA, which dealt with the general responsibility of the accounting authorities. On slide 8, it was noted that the PFMA, in section 86(2), stated that corrective actions could include the board members being held criminally liable for their actions. SIU believed that further investigation by SCCU was warranted. Slide 9 listed that actions could be instituted against the former members of the board for financial misconduct committed under section 83.

He skipped over slides 10, noting merely that some SABC employees failed to disclose business interests and 19 of the 36 board members had failed to disclose. Fruitless and wasteful expenditure was referred for further investigation.

SIU had also investigated conflict of interest. Some members of the Board were exonerated. Legal advice had been taken on how to deal with the board in place between 2010 and 2013 (which was disbanded last year) and the conclusion was that it had discharged its responsibilities. There was, however, a need to engage further with the accounting authority of the SABC. Whatever legal opinions were given still had to be discussed.

He moved on to the revenue matters, involving seven cases. Although he flipped very briefly through the slides and their explanations (see attached presentation for full details) he mentioned only that some commitments were made in contravention of the Delegation of Authority and one case was valued at R100 million. Case 11 was a commitment agreement that was entered into that was not according to normal business practices. Two other cases involved R22 million, where the Delegation of Authority was flouted. In case 12, an employee abused his position to benefit a business in which his wife had interest. Case 13 involved a contract not properly approved because of expiry dates. Case 14 related to the Delegation of Authority again. Other cases were tabled but not dealt with. Mr Makopi noted that the Board had allegedly committed acts of financial misconduct for failing to comply with section 51(1)(c), in relation to case 10.

Mr Makopi reported that the SABC had appointed a firm of attorneys to advise it on how to take the recommendations forward. There were various delays in this process also. In general, he noted that the Board was said to have taken all steps necessary and discharged its responsibility in two cases. He repeated that the Board in general was exonerated and said this was based on additional information that was obtained subsequent to the SIU investigation.

The next question related to security costs. Slide 24 listed those costs incurred in respect of some employees and board members. No policy was provided to the SIU. The former Chairperson and former Acting Group Chief Executive Officer were alleged to have benefited from security services outside the policy, and that had been referred to SARS for a possible contravention of IT Act.

Slide 26 set out air tickets purchases. 1 076 were purchased for employees, but on 36 trips employees were found to have been accompanied by their partners, and by non-partners on 12 of the trips. This was not in compliance with the existing SABC policy and the SIU recommended further investigations to determine if it was possible to claim or recover costs.

Slide 29 said this report could not account for all matters investigation by 29. It was stated again that the SABC had appointed Bokwa Attorneys and some matters needed to be followed up. In some cases, Bokwa Attorneys had recommended that the Board and some e individuals should be absolved because of new evidence coming to light later, or initial findings having been erroneous. The SIU would assist in tracking matters referred to the SCCU or SAPS>

He suggested that the way forward was to allow the SABC Board to engage further with its attorneys. SABC would be required to provide periodic progress. The SIU would be asked to submit a progress report on cases referred to other authorities for further investigation or prosecution. The Department was to engage with its attorney to get more information. The Ministry must be advised what action was necessary and it would give further progress reports to the Committee.

Mr Paul Madipya, Programme Manager, SIU, clarified that he was representing the Head of the Unit, Advocate Soni. The SIU was a creature of statute, and could do only what it was authorised to do by the legislation. An SIU investigation could be triggered only if the President issued a proclamation to the SIU, and the SIU was then obliged to remain within the specific terms of reference and the dates  mentioned in the Schedule. The SIU operated similar to a commission of enquiry. The Report on SABC was submitted to the Office of the Presidency in May 2013.

Mr Madipya explained that when this matter started, the objective of the SIU, when investigating, was to concentrate upon what amounts lost through corruption or maladministration might be recovered through civil action. The SIU Act said that if any criminal conduct was uncovered this must be referred to the NPA. SIU should also recommend that any relevant department pursue any disciplinary action.

Prior to October 2012, a court judgment had confirmed that the SIU could not sue on behalf of other departments, and so at that stage it could not take matters to the Special Tribunal to litigate on behalf of the SABC, to try to recover the money. That was why the recommendation was that the SABC must recover the money itself. Some was recovered. Subsequent to October 2012, the SIU Act was amended, so that SIU would be able to assist relevant departments to recover their money. There was also a change in the methodology, and now SIU had appointed a team of lawyers to do the litigation. He noted that it had recently assisted the Department of Water Affairs (DWA) to sell property to the value of R1.6 million, in part settlement of a civil claim against a former employee of the DWA. 

He noted that there should have been tighter coordination in his office to ensure that there were updates provided on the criminal matters reported to the NPA and SAPS. When SIU referred the final report to the Presidency there should have been tighter coordination to ensure also that the report was forwarded to this Committee, and the Presidency. Part of the problem was that the SIU reported to the Justice, Crime Prevention and Security Cluster. 

Mr Carrim confirmed that Adv Soni of the SIU had also written to the Ministry, explaining that the most recent legislative changes would enable the SIU to do more. It had huge responsibilities, and had not managed to follow up on these cases very diligently, but was now asked to do so, not only because of the change of regulations, but also in recognition of the need to finalise matters.

Discussion
Ms Muthambi expressed concerns about the time taken from the signature of the Proclamation to this report. There were several issues listed on page 15 of the presentation, and she was very worried that it was now four years down the line, yet nothing tangible was seen. She also questioned the lack of time frames. She had been expecting that, for every case presented, there would be an update on the progress actually made. She wondered what was contained in this presentation that was of real use to Members; there seemed to be nothing new and it was not giving any progress reports or current status.

Ms Kilian aligned herself with the concerns of Ms Muthambi. This was now four years after the event and despite the Committee's best attempts it had received very little actual progress reporting. There was clear cut evidence of people who really transgressed everything possible. People were appointed to the boards, and possibly were also currently sitting on other boards, and she strongly suggested that they must be held responsible, in their personal capacities, for she feared they were likely to move on and repeat similar conduct.  There had been some looting, there were irregular appointments with people holding positions for which they were not qualified. She asked when real consequences would be imposed, as until such time as action was taken against wrongdoers in the civil service, boards and SOCs there would be no improvements. She noted the reference on slide 7 to the PFMA, but noted that SABC, being a company, also fell under the Companies Act, and its directors could be charged for decisions that resulted in fruitless and wasteful expenditure. Despite the involvement of a firm of attorneys, nothing had happened. She was extremely disappointed that this Committee would conclude its life not having resolved a matter that arose before it even took office. The investigations had also come at huge cost, both the Auditor-General's report and the SIU, and she implored the Minister to make this his passion post-election (as she was confident that he would be in office) and to bring some or other report back on the SIU. The Minister was called “the action man” and she pleaded for him to take strong action.

Ms Shinn agreed that it was a severe disappointment that there had been no progress over two years. When she joined the Committee in 2011, a report was presented, but the second report by the SABC in 2012 was referred back by the Committee, because it reported nothing new, and the same held today. She accepted that the SIU Act had to be amended, but wondered why the SABC itself had not pursued the nine cases opened at Brixton. She did not believe that there was any will to pursue the wrongdoers and that such a lackadaisical approach by employees at SABC could not be allowed to continue. One third of the staff had conflict of interest and that was a shocking. She hoped radical action would be taken against those who had purchased millions of rand of unviewable material. Through the entire public service, people were not held to account, and simply moved to other posts until they were found out again. There had to be criminal action taken. She asked the Minister for a firm commitment that the cases already lodged at Brixton would be pursued and concluded. She questioned if trial dates had been set, and said it was unforgiveable if such criminality was permitted to drift on.

The Chairperson hoped that Members would propose a way forward .

Mr Steyn said that he fully aligned himself with the dismay at lack of real action. He also noted that there had been no report on whether charges had been laid, where, and the status of those matters, nor whether people had been suspended on full pay. He was very disappointed at slide 13, which said that the matter would have to be pursued further, “including further engagement with the Bokwa attorneys”: There seemed to be opposing findings by the attorneys and SIU, which could be a serious indictment on the work of the SIU. He could not understand why new evidence was forthcoming after Bokwa did their investigations. He would have thought that the SIU would have called for comment. He also did not understand why the attorneys were appointed, apparently to do their own investigations, and conclude that the finding was erroneous, and wondered whether the SIU had been asked if the evidence used was correct. Commenting on the numbers of people who had contravened the delegated authority framework, he asked why there were not checks and balances, to ensure that people acted within their mandate before the financial department paid. There was a need to check that framework again. Furthermore he asked why the Minister would be getting yet more advice, about a year after there had been consultations with the attorneys. This whole matter seemed to be going around in circles. He was worried that some  people, who may very well be guilty of wrongdoing at SABC, would simply resurface elsewhere in the public service and repeat what they had been doing.

Ms Morutoa agreed with all these concerns, said that the matters were only too well known to her, and she felt that this presentation had not taken them any further. She asked the SIU what the Committee should expect now. It had taken a long time to get the proclamation through, but she felt that it was an indictment on the SIU that the matters had really not been handled well since then. She had only one question: What now? Two boards had been appointed to the SABC in the meantime.

The Minister said that he shared the concerns of the Committee. He admitted that he had not known much about the detail of this matter until he had called for information from the DOC, in order to reply to a Parliamentary question, and his answer had been phrased “I am advised that…”. Although he was the Minister, and therefore accountable, he reminded the Committee that he was also human, and a latecomer to the portfolio and he was still not au fait with every issue. Part of the problem had to do with a challenge about the criminal justice system around the slowness with which matters proceeded. From a broader perspective, it would be necessary to consider carefully the role of the DOC and Ministry against other agencies. Some of the matters fell within the mandate of the Board, particularly the management issues. The Minister must clearly act against board members where appropriate, but many of these matters related to employees. He emphasised that the Ministry would be taking advice from the Chief State Law Adviser on how to proceed, and he noted that any actions were essentially using state funds. However, he could assure Members that he would be attending to the investigation with speed. He suggested that the DOC must give a written account and must do anything it was legally responsible for. He would “seek to give a report by end March but certainly at least two weeks before the May elections”. He agreed that if the SIU was not following up, the Board should do so. In regard to the employees he would, after taking legal advice, prepare a letter to the Board, and copy it also to this Committee, asking what it intended to do about the employees.

The Minister said that he had only been told of the Bokwe report last week, but he thought that the Board had probably acted correctly for no doubt its employees would challenge any action in court, and this could avoid matters being stuck for years in the courts on technicalities. The Ministry and DOC did not have the capacity to manage all the issues.

The Minister also noted that he had only received the Public Protector's report at 09:35 that morning, as the website had only displayed a 20 to 30 page summary. The question why the report was not on the website should be raised with Parliament. He assured the Committee that the procedure that he would follow would be legally correct, and he could not speak for the SABC.

In short, he suggested that, if it was legally tenable:
- he would commit to giving a report, by end March, or at least prior to the election
- if necessary, there could be teleconferences arranged to discuss the matter
- whatever the DOC and Ministry must legally do, they would
- an exit report would be written telling the incoming executive to proceed with whatever was outstanding

He was not sure what else the Ministry could do. He pleaded with Members to be human and humane, and remember that this had landed on his desk in December. He was not the Minister of Justice, but he would meet with the SIU and with Bokwa Attorneys, within 14 days,. The current SABC board could not be held to account on the past misdeeds, but it, as well as the DOC would be involved also in the meeting. That would attempt to isolate what the Board would then have to deal with, in respect of employees, what the Minister would need to do in respect of past board members, what the SIU would do and how Bokwa would be involved.

Ms Morutoa said that he would like the Deputy Minister also to be included in the meeting, and the Director General. She would have thought that the Minister would have been briefed thoroughly on the SABC /SIU matters. She confirmed that the Committee was not accusing the Minister of anything, but was questioning the procedures. The Committee had not imagined that it would be dealing with the same issues for so long.

The Deputy Minister noted that one of the challenges in the Department, especially when dealing with investigations, was that money was allocated to take forward the programmes of entities, but would instead be spent on fighting legal battles, which might meant that certain targets were not met. Sometimes deliberately, legal issues could drag out, and she agreed that it was possible that issues may become blurred over time, or that a new administration might not be aware of the nuances. She was not in any way suggesting that a person taking a wrong decision, exceeding a mandate or failing to follow a process correctly should not be sanctioned, for they must indeed take responsibility, and Parliament must ensure they were challenged. Officials engaging in wrongdoing should not be taken into other departments, or boards. Parliament should take a firm stance on this; processes must be followed and actions taken to prevent officials moving to other positions in the same government.

The Chairperson was pleased to hear the Minister propose a way forward. He said that the Minister must also deal with the position of the SABC and ICASA, as the SOCs often appeared to question the role when it suited them, but it should be made very clear what the role of the Ministry was, and what the shareholder compact required. The Minister should have some authority, and they needed to account. The accountability issues had been problematic for some time. Everyone was accountable; including MPs.

The Chairperson asked that the Minister satisfy himself what role the Bokwa Attorneys were supposed to be playing. He hoped to see a report coming out of this.

Ms Morutoa had a serious concern about the period within which the Committee should get feedback and said that it might have an implication on the election process.

Digital migration issues
Mr Carrim noted that digital migration had been on the agenda since 2008 and tabled a presentation on the broadcast digital migration amendments gazetted on 6 December 2014. – He reiterated that a policy stance was adopted that the DOC should have control of the STBs for a number of reasons set out on slide 3 (see attached presentation). There had been an intention initially to launch digital migration in 2008, and end on November 2011, well in time for the 17 June 2015 date as deadline set by the International Telecommunications Union for the digital migration for South Africa and other African countries.  He emphasised that digital migration would strengthen South Africa's capacity to be a more effective information society and knowledge economy. The control system as originally intended in 2008 was set out on slide 7, but in 2012 an amendment to that policy was gazetted to “soften” the use of the STB control system. References to encryption were dropped, but STB control was maintained to ensure that the STBs conformed to South African Bureau of Standards requirements. The previous Minister decided that Sentech should be responsible for the control system. However, eTV took the Minister to court on the grounds that it was free to air broadcasters who should decide who the vendor should be and how the system should be managed. The court found in favour of eTV. Legal advice given to the DOC was that government had the right to make policy on STB control but indeed free to air broadcasters should agree on the supplier, operator, type of control system and how it must be managed. The Ministry and DOC had made several attempts to get the free to air broadcasters to agree on the issues, but without success, even despite facilitation processes that also led to impasse as none of the parties were prepared to compromise. The aim of the facilitation process had been to reduce the differences among the broadcasters, then engage with entrepreneurs to set up a representative committee, to work with government, to amend the policy. Given the lack of consensus, DOC then shaped a policy taking into account what all the parties had to say, including emerging entrepreneurs and all relevant economic-related departments.

One of the main points of contention had been whether it was not possible to drop the idea of control altogether. The Department of Trade and Industry was opposed to this, because it took too long to change the standards, and without controls, government was not sure how it could protect emerging and black industry, because the market would be flooded otherwise. There was a dire need to stimulate the local electronics industry and create jobs. Government had to try to achieve a win/win situation, and ensure that the government subsidy would be used productively. The twelve criteria were set out in slides 14 to 16. SABC had to grow stronger. Cellphones were currently doing what TV had done for communication in the past. The extent of monopolies in the country also had to be reduced. The policy position, essentially, came down to no broadcaster being able to ride on the back of a subsidy. The STB control matters related to broader issues of industrial policy and was not limited to simply broadcasting issues.

The Minister noted that the amendments gazetted on 6 December stated that “the use of a control system is not mandatory”. However, the STBs would have a control system. Any broadcasters that chose to make use of the STB control system would need to pay for it. This hybrid model, where control and no control signals were contained in the same box, had been adopted by other countries, as summarised on slide 21.

The financial implications were that broadcasters wanting to use the control would have to pay government, and would pay the other costs related to the control system. Government's cost for STB control had to be related to the benefits for the local electronics industry, entrepreneurs and jobs. It was estimated that the various forms of direct and indirect incentives and tax foregone would use up R7 billion a year. The manifesto was essentially to do with localisation. STB would promote entrepreneurs and black industry, and would create broad based black economic empowerment incentives.

The Minister said that the amendments were legally sound. The negotiations would be kept open for a while to continue to try to bridge the differences between stakeholders, by way of formal and informal negotiations.  Consensus would be in the national interest. There was not a need to party-politicise the matter, since there were no ideological or policy issues. There was not any intention to cut off anyone, as such as proposal would not be constitutional. The Ministry continue to be engaged, the door was open, would welcome input from Members and pleaded again that there should not be any party-politicisation.

The Chairperson noted that questions would be deferred to the following day.

Committee business: Committee minutes 14 February
The Chairperson noted that the last part of the minutes of the meeting on 14 February had now been reworked, and were tabled again to the Committee for approval.

Ms M Shinn (DA) said that another correction was still needed, on page 2, where Mr Motsoeneng was still referred to under his previous title.

Ms J Kilian (COPE) said she had not received a copy of the revised document, despite request.

Mr A Steyn (DA) raised a concern, on page 5, under point 6.1, which had been debated but no resolution was reached. He felt that the concerns were still not captured fully, and asked if his suggestions would be entertained.

The Chairperson noted that the Minute was not a direct transcript and wondered which part might not have been noted.

The Committee Secretary said that during that meeting there were a number of discussions and if Mr Steyn wanted everything to be captured, then he could do so.

Ms Shinn said that the minutes were not expected to be a “blow-by-blow account” but this minute did not reflect the very strong concerns expressed by the Committee about what had been revealed by the skills audit revealed for the SABC and she believed that the Committee’s extreme disquiet at the poor skills at SABC should at least be expressed.

Ms R Morutoa (ANC) thought that it was not necessary to deal with the minutes in this manner, as it was a repetition of what had been said the last time. The explanation by the Committee Secretary was very vague – either the staff had reworked the minutes, or not. There were many gaps. She pleaded that the Committee should not be spending so much time working on the same minutes, meeting after meeting.

Ms R Lesoma (ANC) requested that all the Members accept that they could not be quoted exactly as they had spoken, and she suggested that a proposal be adopted that the minutes were a true reflection of the meeting.

The Chairperson said that the reference to the title of Mr Motsoeneng would be corrected. He asked if other Members agreed, but noted that several were shaking their heads.

Ms Morutoa still insisted on a response whether the minutes had been re-worked. However, she asked that the Chairperson also follow up, with the Committee Secretary, what the Members expected from the minutes.

The Committee Secretary confirmed that the minutes were different from those presented last week and had been corrected.

Ms Morutoa, having received that assurance, was now prepared to accept the minutes.

Ms Shinn asked that the minutes of today’s meeting should record that the DA did not consider the minutes of 14 February to be a true reflection of the discussion about the SABC.

Ms Kilian also wanted her objection recorded. She agreed with Ms Morutoa that not so much time should be devoted to discussing minutes. She said that the standard of the minutes should improve substantially.

The Chairperson noted that the non-acceptance by COPE and the DA would be noted.

He noted that the minutes of 11 February would be dealt with on the following day, as would a letter circulated to Members, addressed to him by Ms Shinn

The meeting was adjourned to 09:30 on the following day.

 

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