Karpowership deal: way forward

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Mineral Resources and Energy

12 May 2021
Chairperson: Mr S Luzipo (ANC)
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Meeting Summary

The Committee met virtually to adopt meeting minutes for April and May 2021 which it did. The minutes of the 28 April meeting sparked a long discussion on the Karpowership award in the Risk Mitigation IPP Procurement Programme (RMIPPPP) by the Department. At the 28 April meeting, the Committee had voted not to investigate this Department decision.

However, at this meeting it was stated that the reality was that there are very serious allegations and the impression must not be created that the Committee did not want an investigation. The Chairperson reminded the Committee that the Zondo Commission made the criticism that the parliamentary committees do not do their work so the Committee has to do its work – there is no compromise. The various options for the way forward were discussed. Eventually, the Committee agreed that: 1) The Chairperson consult with the House Chairperson on the views expressed by Members. 2) Parliamentary Legal Services provide legal guidance on how to handle the matter, especially if there were issues deemed sub judice. 3) Confer with SCOPA and see if the matter could be handled together with SCOPA. Only when the report-back was given, could the Committee recommend on how to proceed.

Meeting report

The Chairperson announced that the Gas Amendment Bill was finally in Parliament and the Committee would need to make time for that. He reminded the Committee that the Department of Mineral Resources and Energy (DMRE) budget vote debate takes place as a mini-plenary on 18 May 2020. He said the meeting would be shorter than usual as it would be dealing with the adoption of minutes.

The Committee considered and adopted the 28 April 2021 minutes. It then discussed matters arising from the minute about the Committee decision not to conduct an investigation of the Karpowership deal:

Karpowership deal
Mr K Mileham (DA) noted that over the course of the past week there have been many developments about the Karpowership deal. A civil court case was lodged by one of the losing bidders. Also it came to light that Lebanon has impounded the ships of Karpowership due to the company paying commissions to government officials involving corruption. These developments add more weight that the Committee rescind its decision not to investigate.

Mr M Mahlaule (ANC) said the central matter of the discussion on the Karpowership contract was that Members wanted to save the Committee from dealing with procurement. He suggested that the Committee should refer the matter to the Standing Committee on Public Accounts (SCOPA) because it involved financial issues. Secondly, it should seek legal opinion from Parliamentary Legal Services on how to go about the referral. Thirdly, the Chairperson should have a conversation with Chair of Chairs and indicate the Committee's intention to refer the matter to SCOPA. This was so that the Committee was not viewed as hiding something or defending anyone.

Ms T Malinga (ANC) agreed that the Committee indicated that it did not want to be seized with procurement. If the Committee felt there were irregularities, there was a committee of parliament that dealt with such issues which is SCOPA. The matter arising would warrant the attention of SCOPA for procurement; there are environmental concerns that would involve the Department of Environment, Fisheries and Forestry; the Ministry of Mineral Resources and Energy was trying to ensure that there was energy where Eskom would be accepting the electricity onto the grid which involves the Department of Public Enterprises (DPE). This matter affected about four departments. She agreed with Mr Mahlaule that the Chairperson has a discussion with the SCOPA Chairperson before the matter becomes worse out there.

Mr M Wolmarans (ANC) said at the onset of the discussion the Committee had on the Karpowership contract, and included in the content of the minutes, they first dealt with the name of Mr George Mokoena. He is involved in the Karpowership deal, and has links with many other ministers and it was pointed out that it is not referring to the DMRE Director General Thabo Mokoena. The committee discussion was misrepresented by the media. Nothing that is now appearing in the national media was discussed in that meeting. The committee meeting decided there was no need for the decision to conduct an investigation as nothing was presented that needed investigation. The Committee does not want to be involved with procurement but there is no problem to work with the other departments and bodies to ask questions.

Mr Wolmarans said working together with Parliamentary Legal Services, Public Enterprises and SCOPA would assist but for Committee to call for an investigation would be incorrect and premature. The Committee should stay out of the question of an investigation as it was suggested by Mr Mileham. There was no programme and mandate for this Committee to work on that. It would work together with others who were directly involved with whatever would be going on including Parliamentary Legal Services. For the Committee to shift from what was discussed and request an investigation would be out of its scope as the Committee agreed not to get involved in procurement.

Mr Kula (ANC) said he agreed with Mr Wolmarans. There must be sufficient grounds for the Committee on why it is referring the matter to SCOPA. In the meeting, Mr Mileham said the Committee had a duty to scrutinize the decisions of DMRE and the Committee members agreed that should happen as the investigation would stop concerns of undue influence and manipulation during the procurement process. The Committee must be convinced that there was a prima facie case of undue influence and manipulation in that process before calling for an investigation. The Committee has nothing to hide but facts must provide the reasons that necessitate an investigation. The Committee had not been forwarded such compelling reasons to call for investigation on that particular project. The Committee was open to being convinced on why an investigation is needed. There was no need for investigation without compelling reasons. The Committee could not investigate because somebody wanted an investigation. Without compelling reasons that necessitate investigation, there should not be an investigation. There is a concerted effort by some among us to problematise this issue yet they are unable to provide compelling reasons for an investigation. Without that, they will never enjoy our support.

Mr K Mileham (DA) said he wanted to stress that the matter was not about procurement; procurement takes place in a financial process. The matter was about selecting the preferred bidders for the Risk Mitigation IPP Procurement Programme (RMIPPPP). This is about the DMRE bid adjudication process on which the preferred bidders were to go through to Eskom. Procurement would be handled by Eskom through power purchase agreements. The issue was about the scoring, how projects were selected to go through. There had been absolutely zero financial expenditure on the programme so far so it is not within the mandate of SCOPA. There were no financial implications yet but it has got programme and operational implications for the DMRE.

Mr Mileham said the investigation should be on how the RMIPP award process was conducted, who was involved in it, who scored it, how the various scores were allocated to different bidders. The question was not about investigating how the money was spent, there was no procurement aspect to it.

On Mr Kula’s point about needing compelling reasons, Mr Mileham said he had provided these. The first compelling reason was the people close to ministers; people who are politically connected were the beneficiaries. That raises an enormous red flag in the minds of the citizens of South Africa and should raise red flag for this Committee – but this was clearly not the case. The person he was referring to was Mr Thabo George Mokoena.

Secondly, there had been a court action initiated by DNG Power Holdings who claim the Minister's family and DMRE senior members approached DNG in an attempt to manipulate the process in this programme. He is not asking them to decide on the merits of that. However, that was a sufficient reason to investigate how the scores were awarded, if the scores were fair and reasonable and to see if there had been manipulation of the scores.

The third compelling reason was that the Karpowership Group company that is taking the lion share of the programme had been implicated internationally – not nationally – in corrupt activities and had their ships impounded in Lebanon where they had been providing power for eight years.

Mr Mileham said all of this adds up to a weight of evidence that is sufficient to warrant an investigation into the process conducted by DMRE. It was not conducted by any other department, it was conducted by DMRE. The mandate of the Committee was to conduct oversight and hold DMRE accountable by investigating the processes followed. He asked the Committee how passing this to SCOPA would accomplish that. SCOPA deals with financial matters and expenditure of money. This was not about expenditure but the selection of bidders – that was what the investigation would be about.

The Chairperson recalled in the last meeting DMRE was called into, Members said there were questions that it had not answered, DMRE answered those questions. One of the questions asked was could DMRE give the score cards but Members were disputing this. Then Mr Mileham asked for an investigation and for the Committee to vote on that. Thus the Chairperson could not go back to DMRE and ask if it was willing to provide the score cards. There was a lengthy argument at that meeting. Therefore, the Chairperson asked what stops the Members now calling DMRE and asking for that information. [connection lost]

The Chairperson continued that perhaps the word "investigation" is off-putting to some Members and should be unpacked. Point 1 is Members need answers from DMRE and, in his view, Members are allowed to get those answers. If we say the Committee remains seized with this matter, it means the Committee wants accountability and it must get those answers. Perhaps we are saying the same thing but differently. He understood Mr Mahlaule saying the Committee must continue and remain seized with the matter and get the answers that we need.

On the role of the Committee, the Chairperson shared a completely different view that SCOPA should come in only when the mess or the damage has been caused. That is the weakness of the public service system. Whether the Committee refers or works together with SCOPA, right now it is only the bid selection process but down the line that process would have financial implications. Whether the process was followed properly, procurement does have financial implications including the fact that it might have been done unfairly or wrongly. He believes answers are needed if the process is flawed as it might save the next stage which involves three departments: Public Enterprises, Eskom as client and Treasury. If SCOPA is brought in, it has a much broader mandate to engage any department that is impacted. Legal Services would be able to guide the Committee with a legal opinion and then take those steps. We need much more guidance as possible and he will talk to the House Chairperson. The Department was called in and it did not respond to the score cards. However, the Department is asked, it may do so. He asked Mr Mileham to unpack what 'investigation' entails. Mr Mileham is asking to rescind the decision on the investigation.

Mr Mileham said he submitted parliamentary questions on 17 March to the Minister with no response yet about the RMIPP. The Committee had asked the Department in a meeting and it had given very simplified responses which did not really address some of the questions. The methodology for an investigation has two ways of doing it. The first way was the Committee conduct the investigation and that was the way some Portfolio Committees have done it in the past. For example, the Portfolio Committee on Communications conducted an investigation on the SABC that it did itself. It was open format as it put aside several days to get information and allowed Members to ask questions they have and proceed down whatever route they want in the investigation. The department must then answer comprehensively. The Committee can call whoever they want as witnesses or as evidence leader. The second way was to ask Parliament to establish an Ad Hoc Committee to investigate the allegations with the programme following a similar format which was done in the Eskom enquiry. It would be a separate parliamentary committee established by the National Assembly for the specific purpose of investigating the matter. Those are the two ways of going forward.

Ms Malinga said it would be improper for the Committee to investigate a sub judice matter. The Chairperson was correct in saying Parliamentary Legal Services needed to advise the Committee since the matter was now sub judice. By continuing with the investigation when the matter is sub judice, the Committee was putting the cart before the horse. Perhaps the Committee should investigate when the Department fails to provide the score cards and procurement information because the report brought to the Committee said 17 companies bid and eight were successful. The worry was that the bidder affected or who felt unfairly dealt with by DMRE, do they not have a right to request the scores. By conducting the investigation when the matter was sub judice, the Committee was shooting itself in the foot.

Mr J Lorimer (DA) said it has gone beyond score cards because of the additional information that had come out about clouds that hang over the matter. The Committee needed a much more thorough enquiry as Mr Mileham explained the two options to the Committee. Taking into consideration what other Members said about the cross-departmental nature of the matter involving the environment, courts and so on, the suggestion for an Ad Hoc Committee involving other portfolios was probably the one to go with.

Ms P Madokwe (EFF) spoke about approaching Parliamentary Legal Services as noted by Ms Malinga. There were lot of layers to the discussion and the matter was before the courts. The reality was that there are very serious allegations out there. It must not be that there was an impression created that the Committee did not want an investigation to continue.

However, the Committee needed to be advised properly. Ms Madokwe said the matter should be referred to Parliamentary Legal Services to advise on the options available to the Committee including Mr Mileham’s suggestions on an investigation. After getting the legal advice, the Committee could take it from there.

Mr Mahlaule said the fact was that the Committee could not speak about this project and not talk about procurement and supply chain management. What would the Committee do in a situation if was asked to investigate DMRE or the project? Some of the questions that were asked DMRE, we drew the conclusion that the responses were simplistic. Who determines whether the responses were simplistic, correct or not wrong? That is where the problem starts. He will repeat his proposals. Mr Mileham requested that the decision the Committee took on 28 April must be rescinded. It is very clear we are rescinding the decision but we are making proposals: The Chair must have a conversation with the Chair of Chairs about the intention to refer this matter – whether we call it an investigation or not – to a relevant body that can be seized with this issue and we move forward. Parliamentary Legal Services will give a legal opinion to determine which body is well vested to tackle this - whether it is SCOPA or an Ad Hoc Committee.

Mr Mahlaule agreed with Ms Madokwe that one should never create an impression that the Committee was refusing to have an investigation. We are only saying the Committee should be protected from dealing with supply chain management matters including procurement.

Mr Kula said the Chairperson gave a very clear direction to the Portfolio Committee. To establish an Ad Hoc Committee is getting ahead of ourselves. He suggested that the Committee should call in DMRE and identify all the concerns about the RMIPP Procurement Programme so the DMRE could clarify and respond to the issues about family links and score cards. If the Committee was not satisfied with the clarity given by DMRE, then it should follow the route proposed by Mr Mahlaule. It would be unfair of the Committee not to give DMRE an opportunity to respond to the concerns.

The Chairperson said he was not sure if the Committee was suggesting that the matter should be dealt with by others, was the Committee not capable to do its oversight duty? As a parliamentary committee, the Committee had a responsibility – DMRE must account. We cannot abdicate this responsibility. SCOPA is part of us but the Rules of Parliament are clear; DMRE must be held accountable. If we get wishy-washy answers, we must tell them. That includes calling in the DMRE. If we rescind, it also means we rescind the investigation because DMRE never said it cannot give the score cards. The problem was that you have a call for something that had been not declined or denied. Could the Committee ask for legal opinion on how to handle the matter including the information that had emerged as allegations, including the sub judice matter? The Committee could correspond with House Chairperson and state what happened and ask for guidance. He was not sure a parliamentary committee could say, "No, we can't do this work, can this work be taken over by someone Parliament can identify". As a parliamentary committee, the Committee should hold DMRE accountable including matters of this nature. Then the Committee could report on what direction to take. The Zondo Commission made the criticism that the parliamentary committees do not do their work so the Committee has to do its work. There is no compromise. Only when the Committee feels there are certain things [connectivity lost] are hiding; then the Committee can appeal to a higher strata.

The Chairperson said that the matter is not exhausted. The Committee could still call back DMRE. Whether the Committee like it or not, SCOPA could decide to wake up tomorrow and call in DMRE. SCOPA did not need permission from this Committee. The Chair would engage with the House Chairperson on all the views of the Members and he would ask for a legal opinion. He could also engage with the SCOPA Chairperson proactively. In the meantime, the Committee should invite DMRE again and include that question of the score cards. Did Members agree?

Mr Mahlaule referred to the last point about calling DMRE to account. He proposed avoiding a situation where it would be a meeting between Mr Mileham and DMRE. The Committee should be privy to the questions to be posed to DMRE so they could all be active participants to avoid a situation where Members were quiet and Mr Mileham would ask questions. Perhaps the Committee could find a way to hold DMRE accountable collectively.

Mr Mileham was concerned that the Committee was hearing one side to the matter only and relied on the response of DMRE; not the response of other parties to the matter. Specifically, would the Committee allow for example unsuccessful bidders or civil society to make submission on the matter? Was the Committee saying that it would ask questions solely of DMRE and get its response? Frankly, that was not good enough in his opinion.

Ms Malinga asked for a point of order and said the DMRE report to the Committee stated there were 17 bidders and eight were selected. Why would the Committee want to listen to the unsuccessful bidders?

Mr Mileham made a point of order on her exclamation of "Tula".

Mr Mileham said the Committee had received a one-sided view of the whole process and had been asked to take DMRE’s word for what is going on. There were number of allegations of irregularities involving DMRE. It thus behoved the Committee to ask questions of other parties to the matter such as the other bidders whether successful or unsuccessful and civil society who has raised a number of concerns about the process. If the Committee relied on DMRE answers, that would not be enough.

The Chairperson said the Committee was not dealing with whether to call DMRE or not. Members have made proposals on how they think the Committee should proceed with the matter. It is not as if there is a process that has been agreed to and only one process would only cater for that. 1) The Chairperson has to have the consultation with the House Chairperson on the views expressed Members. 2) The Committee will look to Parliamentary Legal Services to provide legal guidance on how to handle the matter, especially if there were issues that could be deemed sub judice. 3) Confer and share ideas with SCOPA and see if the matter could be handled together with SCOPA. The Committee had not reached the stage of how or who would be called and so forth. Only when the report-back was given, could the Committee then start to make recommendations or take a decision to discussions and agree on how to proceed. The Committee was not yet at that stage. The Chairperson asked the Committee to let him go and report the matter and take it from there.

The Members agreed and supported the approach.

Mr T Langa (EFF) was concerned about a point of order on a point of order. Ms Malinga was disturbed and the Chairperson had to rule.

The Chairperson noted the concern and said he had ruled. He did not want to entertain the matter. There was nothing to achieve on wasting time on the matter. Committee members should respect each other as adults and concern itself with matters that affect the people of South Africa .

The Chairperson asked the meeting to move forward to the next set of minutes.

The Committee adopted the remaining meeting minutes of 4, 5 and 7 May 2021.

Meeting adjourned.

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