Nedlac Forensic Audit Report; Committee Report on Labour Relations Amendment Private Member’s Bill

Meeting report

Opening Remarks by the Chairperson
The Chairperson said two months ago the Minister of Labour was requested to answer to the Committee on the Nedlac forensic report. However the Committee decided that it could not call the Minister to answer on an issue that it was not fully informed about and had not discussed. The Committee had agreed that the first step was to call in Nedlac and the Department of Labour to brief the Committee on the forensic report. The Committee should be briefed on the processes followed by the department on the forensic report and all that transpired.

Mr Thobile Lamati, Director General: Department of Labour (DoL), introduced his team and commented that the Department does oversight of the finances of Nedlac as Nedlac accessed its budget via the Department allocation. He said as part of the oversight and legal requirement, the Department was entrusted through its Director of Financial Liaison on Public Entities, Mr Freddie Peterson, to see to it that the finances of Nedlac and all entities reporting to the department, were well managed.

Nedlac briefing on its Forensic Report
Mr Mahardia Navidad, Acting Executive Director: Nedlac introduced the team from Nedlac. He briefed the Committee on the background to the forensic investigation. The forensic investigation emanated from a letter from the Department of Labour dated 8 November 2011, submitted to the former chairperson of the Nedlac Audit Committee.

The DoL letter raised a number of alleged irregularities at Nedlac. The Nedlac Audit Committee at its meeting on 17 January 2012 decided that sufficient grounds existed to conduct a forensic investigation into the allegations. AFCA and Partners were appointed on 5 March 2012 to conduct the forensic investigation. They were required to investigate the allegations contained in the letter from the DoL, as well as those that were subsequently raised by Nedlac. The forensic investigation covered a period of three financial years starting from 1 April 2009 to 31 March 2012.The final report was provided to Nedlac in November 2012.

Ms F Loliwe (ANC) asked if all the documents outlined in the background were attached to the presentation in order for them to have a concrete discussion. She asked for the letter from DoL that requested that a forensic audit be carried out.

Mr Navidad replied that the letter was attached to the report as Annexure B. He added that the documentation of the forensic report included all the relevant annexures which included the letter from the DoL.

The Chairperson commented that the Committee did not have the letter in their documentation.

Mr Navidad replied that the entire document was sent which included the letter.

The Chairperson asked who sent the report to the Committee as the Committee did not have the letter.
After searching through the documents for some minutes, the annexure B was found.

The Chairperson apologized on finding the letter. She asked for full details of the steps taken by Nedlac from the date the letter was received. She asked if the letter was authored by the Minister or the Director General as the department had an organogram. She had not read the letter but assumed that the Minister or the Director General would have written the letter as she did not believe that a forensic audit could be done without the signature of the Minister or accounting officer. She asked for the processes followed y Nedlac upon receipt of the letter.

Mr Navidad responded that he took over as the Acting Executive Director of Nedlac in January 2015 and this is when he became involved in this matter. He suggested that some of the issues of the history of this matter be answered by Mr Freddie Peterson. He added that the letter was dated 8 November 2011 and was addressed to the Chairperson of Nedlac Audit Committee, written by Mr Freddie Peterson who was the Director of Financial Liaison on Public Entities which was copied to Mr Alistair Smith - the former Executive Director of Nedlac; Mr Les Keltledas Deputy Director General Nedlac - former overall conveyer for government, and the Chief Financial Officer of DoL. He said the letter set out a range of allegations in respect of financial and administrative irregularities at Nedlac. The report provided a summary of each one of the alleged irregularities and actions taken by Nedlac. The letter was received and then considered by the Audit Committee of Nedlac.

Ms Loliwe commented that some of the Committee members did not have the opportunity to read the letter so she requested that the author of the letter speak to the history of the matter.

The Chairperson agreed that the author of the letter inform them about the processes that were followed before requesting a forensic audit as the Executive Accounting Officer had to sign off for any legitimate forensic audit to be carried out.

Mr Freddie Peterson, Director of Financial Liaison on Public Entities in DoL responded that as a department director, he reported to the Chief Financial Officer of DoL and also served on the Audit Committee of Nedlac. Nedlac was a public entity which had a certain degree of autonomy as it had its own Audit and Finance Committees. In terms of the PFMA if the Audit Committee detected irregularities, it had the right to investigate the irregularities. He said a number of allegations were forwarded to him which involved financial irregularities.

The Chairperson asked if Nedlac’s autonomy exempted the Minister or Director General as any process that had to do with finances should include the Executive. She reiterated that the processes of forensic investigation should include the Executive as Nedlac would not answer to the public on financial irregularities. She asked if Nedlac had the right to embark on an investigation without the Executive as the Portfolio Committee wanted the Minister to give account on the forensic report. She asked where Nedlac’s autonomy placed the Minister and Director General. She asked if the processes followed by Nedlac were legitimate before proceeding with the briefing as the Committee had made it clear that they wanted the full details in order not to be seen as witch hunting or favoring anyone. She said the CFO reported to the Director General and Nedlac reported to the Minister.

Mr Peterson responded that when allegations were made, they had to be first investigated. The Audit Committee took the step to see if there was any justification to the allegations. He reiterated that the Treasury regulations allowed the Audit Committee to conduct its own investigation into allegations. When it was confirmed, the Minister was informed accordingly, and the letter copied the CFO of DoL, and Nedlac also had a discussion with the Director General. He said once it was ascertained that there was merit to the allegations, the Audit Committee then informed the DG and the Minister.

The Chairperson asked if Mr Peterson was part of those who informed the Minister or if the Minister was called into a meeting on the forensic audit.

Mr Peterson replied that a submission was made to the Minister that a forensic audit had taken place.

The Chairperson commented that the submission to the Minister came after the decision was taken by Nedlac to carry out a forensic audit and asked if that was the process followed. She asked if Nedlac had the power to carry out a forensic audit without the Minister as the Minister would at the end of the day account to the public. She asked who authorised the forensic audit.

Ms Loliwe commented that Mr Peterson was serving on the Audit Committee and he also wrote the letter to the Audit Chairperson. His letter should not be the last voice of command as he was reporting the allegations reported to him. Hence she asked for the letter that empowered the forensic audit to go through. She asked if it was his appeal letter to the Audit Committee or if the Audit Committee was supposed to act on his letter and take a decision. She asked for the letter that stated that a decision was taken by the Audit Committee to embark on forensic audit. She asked the DG for the conveyers from the department.

Mr Thobile Lamati, DOL Director General, replied that only one conveyer was available at the meeting as others had tendered their apologies.

Ms Loliwe commented that the Committee still had to hear from the Department of Labour and also from the Community component because this was just a hearing from Nedlac.

Mr Peterson reiterated that the Treasury Regulations made provision for the Audit Committee to act and take decisions. He referred to the second to last paragraph of his letter where he cautioned the Audit Committee and appealed to them to appoint the Office of the Auditor-General to perform an investigation. He said Nedlac appointed an Acting Chief Financial Officer because when the former CFO was approached with the letter and was to be placed on precautionary suspension, he decided to resign. He added that the Audit Committee decided that they would rely on the Acting CFO to see if there was any merit that would justify the expense to be incurred on a forensic investigation. He said it was not solely based on the allegations he conveyed to the Audit Committee. The CFO also conducted an investigation and based on that the Audit Committee took the decision to proceed with the investigation. He said there was merit in the Audit Committee’s investigation.

Ms Loliwe asked why Mr Peterson’s letter was attached instead of the Audit Committee’s decision.

Mr Navidad responded that there was a prior request from the Democratic Alliance (DA) for the report which Nedlac complied with and the full report from the forensic investigation together with all the documentation was tabled. The minute of the Audit Committee’s decision was not part of the report of the forensic investigation.

Ms  Loliwe commented that the DA wrote to Nedlac requesting some information when Nedlac was called by the Committee. Nedlac did not prepare for the Committee but rather brought the DA’s requested materials to the meeting. She said it was correct for DA to request whatever it wanted but Nedlac should not have assumed that what satisfied the DA also satisfied the Committee. The Portfolio Committee wanted a full report which included every supporting document.

The Chairperson asked at what stage did Nedlac decide to give the report to the DA and asked for the letter from the DA.

Mr Navidad replied that the DA’s request was in January 2015.

The Chairperson requested that ANC have a caucus and adjourned the meeting for some minutes.

Meeting resumes after caucus

Ms Loliwe commented that the Committee had requested Nedlac to report on the forensic audit. She appreciated that Nedlac brought a report but the report was meant for the DA not the Committee. She suggested that Nedlac went back and bring the full report that included all documents linked to the forensic report and all conveyers must be present at the next meeting in order to reach a decision as this matter had been dragged on for rather too long and needed a closure.

Ms T Tongwane (ANC) supported the proposal of Ms Loliwe.

Mr I Ollis (DA) asked if the ANC caucus specified in its letter to the Committee that the requested documents must be available and asked to see a copy of the ANC’s letter to Nedlac where it specified those documents. He asked if the ANC caucus was suggesting that the Audit Committee of Nedlac was not allowed to conduct investigation into fraud.

Ms D Rantho (ANC Co-opt) commented that everyone should know that for a forensic report to be tabled, all relevant documents must be presented and every related person should be present too. It was not ANC’s aim to silence cases of fraud rather investigation should take the correct procedure in order for the truth to be known.

Ms Loliwe commented that the Committee did not have at its disposal the evidence that the Audit Committee had sanctioned the forensic audit as the letter was a request directed to the Audit Committee Chairperson for a forensic investigation to take place. There was no proof that the Audit Committee as an individual unit could not go as far as sanctioning a forensic audit. The Committee was not questioning the powers of the Audit Committee and that a department official being a member of the audit did not make him "an Audit Committee".

Mr M Bagraim (DA) expressed his displeasure. He said the ANC was looking for other documents surrounding the forensic audit when the Committee had the forensic audit report right before them that could be explored at the meeting. This could carry on forever as other documents could be outstanding come the next meeting as there were hundreds of other letters and emails. The Committee had agreed that it would have sight of the forensic audit and explore it; the Chairperson had ordered Nedlac to present the forensic audit. The Portfolio Committee was an oversight Committee and he suggested the Committee explore the forensic audit. If the ANC wanted any document surrounding the forensic audit it could have asked for it. The people were present at the meeting to explore the forensic audit. it was ridiculous to keep postponing and he asked how far the Committee would go in requesting documents. The forensic audit was done two years ago and he asked why ANC did not request before now for these extra documents if needed.

The Chairperson responded that the DA had given the Committee a copy of the audit which some members were not privileged to have read.

Mr Ollis asked for ANC letter which requested the said documents from Nedlac. If the meeting was ended without exploring the report, then ANC would have wasted the time of the Committee. DA had requested this forensic document from the Minister which she had refused to give. The DA also requested that the ANC carry out the investigation but this was stopped. The DA had provided the document yet the Chairperson was stopping it from being explored. The ANC was trying to shut down the discussion of this document by calling for extraneous documents that had never been requested. He asked that the ANC provide proof to the Committee that it had requested those minutes. The ANC was trying to whitewash the investigation.

The Chairperson commented that the ANC was used to such rhetoric as it was not new. The Committee would not listen to the report today nor would it investigate what transpired for the report to take place as it would be done the Committee way. Mr Ollis could say whatever he wanted to say but it would be done the Committee way, not his way.

Mr M Plouamma (AGANG) commented that he did not doubt the intentions of the Chairperson and the technical issues she raised initially. It was suspicious to postpone the report due to incomplete documentation or due to apologies from some people who did not come. He did not want the Chairperson to lose her virtue as the Chairperson of the Portfolio Committee. It would have benefitted the Committee to go through the report it had while outstanding documents could be outlined for furnishing at a future date. Some issues could emerge through this engagement or by interrogating this report which could be added to what the Committee wanted. If the Committee was truly serious about fighting corruption then it should not wait an extra day. Some Nedlac members had handed in an apology but could be dragged to the Committee if they did not appear in the future or they go to the tribunal. He expressed shock that the Committee was taking a political stand on the report rather than taking a anonymous attitude. He was not convinced that the report should be left unexplored. He received this report from the Committee Secretary but was not sure whether he was influenced by DA in giving the Committee the report. He was more interested in the merit of the report irrespective of the party from where it came as he merely wanted the corrupt people to be removed from serving in government. He did not support the postponement of the meeting and if it had to be postponed it should be for extraordinary reasons.

Ms Loliwe commented that she understood the eagerness of those who had the privilege of having this report earlier than others. She agreed that Mr Ollis had sent the report but the Committee wanted to get it officially as what Mr Ollis had requested, may not meet the Committee’s requirements. The Committee expected the department and its entities to bring all relevant documents when invited to present. The department should not expect the Committee to have a hint of what was critical as the Committee did not work in the department. The case could be tabled and finalised if the documents included an attachment stating that after returning to the Chairperson of the Audit Committee, the Audit Committee agreed to sanction the forensic audit. She maintained that Nedlac go back to bring all the relevant documents to this forensic investigation as the Committee was not impressed by all the numbers in this report. The report would be read but not without satisfying the Committee that the decision was taken by the Audit Committee. The Committee would not succumb to blackmail where there was insinuation that the ANC was always supporting all issues dealing with fraudulent transactions. She understood that the Committee was from different parties and some were present to impress the media. The Committee should be unanimous about getting the documents needed.

The Chairperson commented that the proposal was made and supported. Not all members relied on the media for information as the Committee had the responsibility to verify media information especially when it dealt with people. The law must take its course on corruption but the Committee would not short circuit the process for it to get to the root of what had transpired, as the Committee was required to answer equally as the Minister. Not everyone was happy to talk to the media on things they could not defend before the courts. The Committee would not be dragged by anybody not to get to the root of the matter. Some people had to give account in order for the Committee to take a final decision on this matter. If there was certain information some people wanted to slide under the carpet, then such people were suspicious. Committee members had the right to express themselves but that would not stop the Committee. A forensic report had to be given with the proof that the process followed in the investigation was as important to the Committee. If some processes were undermined such were questionable as the Committee wanted to know what had transpired. The Committee wanted those who were part of the process to answer to the Committee, not someone who was uncertain.

Mr Ollis commented that there should be a vote for or against the postponement.

The Chairperson expressed displeasure at how the DA continually undermined her and she asked not to be harassed as she knew there would be a vote. The Committee wanted the truth and would leave no stone unturned as every document on the forensic report had to be presented. The Committee wanted to know about the submission given to the Minister and at what stage it was given. The Committee wanted to know about the letter sent from the DA to Nedlac. She told the Director General that Nedlac had given other parties a letter that had not come to the Committee. A forensic report was meant to be confidential and not given away at any stage. She asked if the forensic report could be given to people without the Director General’s consent. The same people who had the opportunity to look at the report before others, were the same who wanted to drag the Committee into exploring the report now. If wanting to get information would label ANC as people who did not want to investigate corruption, then so be it, but time would tell. If the Committee was not interested it would not have called for the meeting as it had all the right to suppress this process from taking place.

The Chairperson cautioned media representatives not to disturb the meeting as she had the right as the Chairperson to correct the public. The public could not participate by laughing or talking as if it was the norm. The Committee wanted all the requested information as it wanted to understand the processes that were taken.

Mr Ollis called for point of order as there was no rule in Parliament that states that a member of public may not laugh. The Committee should not be turned into a joke by making rulings that were not in the rule book.

The Chairperson commented that Mr Ollis was defending the media because he brought them to the meeting.

Mr Ollis commented that he did not bring anyone to the meeting and asked that the statement be withdrawn.

The Chairperson commented that the meeting would be adjourned.

Mr Bagraim commented that the department should be told what to present at the next meeting.

The Chairperson asked the Director General and Nedlac if they were aware of what the Committee requested as it would be followed by a formal letter.

Mr Lamati replied that the department was meant to bring all the supporting documents outlining the processes that were followed leading to the forensic investigation.

Mr Loliwe added that all conveyers must be present too.

The Chairperson said the request was very clear. She added that there was a proposal for a vote on the matter. She would not deny members the opportunity to exercise their democratic right to vote.

She adjourned the meeting for five minutes.

Meeting resumed
The Chairperson asked the Committee Secretary to inform the Committee on the process to be followed; those that had or did not have the right to vote.
 
The Committee Secretary commented that three parties were present: ANC was entitled to six votes; DA was entitled to two votes and AGANG was entitled to one vote. The motion would be put forward, those in favor would raise their hands, the number would be counted and those against would do the same.

Ms Loliwe commented that as the ANC, she proposed that the department should go back, prepare thoroughly, bring all the relevant documents to this investigation and all conveyers be invited for the next meeting. She therefore moved the motion for the meeting to be adjourned.

Ms Rantho seconded the motion that the meeting be adjourned.

Mr Ollis asked if Ms Rantho was a member of the Portfolio Committee.

The Chairperson replied that Ms Rantho was a co-opted member.

Mr Ollis commented that a non-member of the Committee was not allowed to vote.

The Committee Secretary commented that the ANC was entitled to six votes and if a co-opted fell within the number then such had the right to vote.

Five ANC MPs voted in favor of the motion while three MPs (two DA MPs and one AGANG MP) voted against the motion.

The Chairperson announced that the meeting was adjourned till further notice.

Committee Report on Labour Relations Amendment Private Member’s Bill
The Chairperson commented that the LRDA PMB1 brought to the Committee by Mr Ian Ollis MP would have to be approved or disapproved. She asked the Committee Secretary to take members through the process.

The Committee Secretary commented that the Bill had been proposed had to be reported on to the House. There was a Motion of Desirability which would be voted on. Members who thought the legislation was desirable would vote for the Motion of Desirability while those who thought the Bill was undesirable would vote against.

The Motion of Desirability for the Labour Relations Amendment PMB1 of 2015 stated that in the opinion of the Portfolio Committee on Labour, legislation was desirable to amend the Labour Relations Act of 1995 so as to provide for the accountability of a trade union in the event of violence, destruction to property and intimidation by union members during a protracted strike. Also to empower the Labour Court to force employers and unions into arbitration where strikes were excessively violent, or declare such a strike unprotected.

The Committee Secretary commented that those in favor of the legislation as desirable would raise their hand while those against would do the same thereafter. The Motion of Desirability  was taken directly from the long title of the Bill that was proposed. He asked if the Committee felt it was desirable to have the Bill.

Two DA members voted in favor of the Bill while five ANC members voted against the Bill.

The Committee Secretary read the report of the Portfolio Committee on Labour on the LRA Bill PMB1 of 2015 dated 17 June 2015.

"The Portfolio Committee on Labour, having considered the subject of the LRA Bill PMB1 of 2015, referred to it and classified by the joint tag mechanism as the Section 75 Bill reports as follows:

The Bill was introduced and referred to the Portfolio Committee on Labour for consideration and report on 18 February 2015. In compliance with the interim measures for the introduction and consideration of Private Member’s Bills, the Committee provided reasonable notice to Mr Ollis the member who introduced the Bill to brief the Committee on the Bill on the 20 May 2015. During the deliberation, the Committee considered the merit of the Bill and concluded that what the Bill proposed was already provided for in the Regulations of Gatherings Act of 1993 and that the Nedlac process led by the Deputy President was dealing with this matter of prolonged and at times violent strikes so the Bill was rejected by vote of the Committee".

Mr Ollis commented that the DA’s objection to the Committee Report should be recorded so as to avoid a situation at the National Assembly where it would be said that he did not object.

The Chairperson commented that the meeting was adjourned.