South African Post Office Bill [B2-2010]: Deliberations

Meeting report

Deliberations on the South African Post Office Bill
Mr Norman Munzhelele, Acting Director-General, Department of Communications (DOC) said that the Department had prepared a detailed briefing document on the amendments to the Bill discussed with the Committee on 14 September 2010 (see attached document).

Mr Alf Wiltz, Director: Legal Services, ICT Development, DOC took the Committee through the amendments made to the Long Title, Clause 1 (Definitions), Clause 2 (Objects of the Act) and Clause 3 (Continued existence of the Post Office).

The Chairperson recalled that the Committee had requested the organisational structure of the South African Post Office (SAPO) and an indication of how the organisation would be affected by the Bill.

Mr Wiltz replied that the matter would be addressed at a later stage in the proceedings, when the provisions concerning the SAPO organogram were dealt with.  He resumed the briefing with the amendments made to Clause 4 (separation of accounts) and Clause 5 (duties of SAPO).  Sub-clauses (e) and (f) of Clause 5 (1) were initially deleted but the Department had decided to retain sub-clause (e) as it was necessary to specify the duties of SAPO with regard to the provision of universal postal services and the access to services.

The Chairperson queried the omission of sub-clause (f) as the issue of ensuring greater equity in respect of the distribution of services differed from the issue of universal services and access.  He suggested that Clause 5 (1) (f) was retained in the Bill.

Mr N Van den Berg (DA) agreed with the Chairperson that sub-clause (f) should be retained.

Mr Wiltz resumed the briefing with the remainder of the amendments to Clause 5 and the c proposed changes to Clause 6 (Powers of the Post Office), Clause 8 (Government support to Post Office and loans by Post Office) and Clause 9 (Board of SAPO).

The Chairperson questioned the practicality of implementing Clause 9 (6) (a).  In effect, the Board of SAPO would have to meet before Board members attended a meeting of the Board of the Postbank.  The requirement appeared to be rather onerous and he suggested that the Department reconsidered the practical implementation and the potential consequences of the clause.

Mr Wiltz agreed to the suggestion and resumed the briefing with the proposed amendments to Clause 11 (Disqualification from membership of Board and disclosure).

Mr Van den Berg said that it was not clear if a member of the Board would be allowed to continue to serve after a conflict of interest was disclosed.

Mr Wiltz explained that Board members were required to dispose of their interests before joining the Board or else they would be disqualified if they had not divested the interests within three months.  The provision had to cover conflicts of interest as well as allow for a transition period.  The provision applied to family members of the Board member as well but the member could, for example, not control the actions of a father.  In such cases, SAPO could intervene.

Ms J Killian (COPE) remarked that the Postbank Bill introduced heavy punitive measures with regard to conflicts of interest.  The Committee wished similar measures to apply in the Post Office Bill.  She did not recall any discussion on a three-month period of grace.

Mr Wiltz replied that SAPO had an existing Board and the members had vested rights that could be potential conflicts of interest.  For this reason, the Bill had to make provision for a transition period.  In the case of the Postbank, the Board was new.

Mr Munzhelele added that the undesirable possibility of a dysfunctional Board was avoided by the provision for a transition period.

Ms N Michael (DA) asked for an explanation of the intervention by SAPO in cases where the family members of Board members had conflicting interests.

The Chairperson explained the difference between new and existing Board members.

Mr Wiltz replied that the provision was included in Clause 14 (4).

Mr K Zondi (IFP) asked what the position was of the Board member during the three-month period.

Mr Wiltz replied that the member had to refrain from any participation in the activities of the Board, in terms of Clause 14 (1) (a).

Me Zondi understood that the intention was to avoid the Board becoming dysfunctional but the requirement would have the opposite effect in practice.

Mr Van den Berg was of the opinion that the three-month period allowed adequate time for members to indulge in nefarious activities.

Mr Wiltz pointed out that the provisions in the Bill required members to declare their interests immediately.

The Chairperson queried the version of the Constitution referred to in Clause 11 (1) (e), i.e. 1993 rather than 1996

Mr Wiltz confirmed that the reference to the Constitution of the Republic of South Africa, 1993 (Act no. 200 of 1993) was correct.

Mr Willie Vukela, Director: Postal Policy, ICT Development, DOC resumed the briefing with the amendments to Clause 12 (Appointment of non-executive members of Board) and Clause 13 (Resignation, removal from office and vacancies).

Mr Zondi requested further explanation of Clause 13 (2) (e), which dealt with members of the Board who ‘neglected to properly perform the functions of his or her office’.

Mr Wiltz replied that the members of the Board had the duty to perform all the functions required of them.  There were many examples in legislation of this particular provision.

The Chairperson felt that the clause was open to wide discretion and asked what criteria were applicable to the neglect of duty.

Mr Wiltz replied that the neglect of duties and functions were determined by case law.  The Court would apply a reasonable Board member test to determine what would constitute neglect.

The Chairperson asked why the previous version of Clause 13 (2) (d) was omitted from the Bill.

Mr Wiltz advised that the clause was not intentionally omitted.  The Department had copied the applicable provisions from the Postbank Bill. 

Ms Killian remarked that there were serious governance issues concerning Government-owned entities.  She suggested that the Bill included as much as possible to ensure that proper governance took place.  The articles of association of SAPO were an important issue and the Bill should make adequate provision.

The Chairperson suggested that the Department included the earlier Clause 13 (2) (d) in the Bill as well.

Mr Vukela resumed the briefing on the amendments to Clause 14 (Disclosure and fiduciary duties of Board members).

The Chairperson remarked that Clause 14 appeared to be a repetition of Clause 11.

Mr Wiltz explained that the provisions concerning conflicts of interest needed to be dealt with in terms of the appointment of Board members, the declaration of interests and the disqualification of members.

Mr Vukela continued with the briefing on the amendments to Clause 15 (procedures at meetings and committees of Board), Clause 22 (personnel of Post Office), Clause 25 (intervention by Minister), Clause 27 (application of Companies Act to Post Office), Clause 29 (regulations and policy), Clause 30 (offences and penalties) and Clause 32 (short title and commencement).

The Chairperson said that the Committee had agreed that the SAPO Board would consist of 3 executive and 9 other members.

Mr Vukela said that the SAPO subsidiaries had to be taken into account when determining the number of Members.  The Department had asked SAPO to submit a recommendation.

Mr Van den Berg recalled the agreement and asked if 13 Board members were too many.  It was necessary to take into consideration that the members had to be able to carry out their functions as well as the costs involved in convening Board meetings.

The Chairperson was under the impression that the SAPO executives sat on more than one Board.  He was of the opinion that 13 members were too many and he requested a briefing from SAPO to the Committee on the issue.

Ms Killian was wary of creating a precedent and cautioned against not having adequate structures to ensure good governance.  There were many examples of good Board structures available.  A good Board should not be involved in day-to-day management issues, which only led to interference and arguments.

The Chairperson requested clarity on the provision in Clause 22 (2), which required the Chief Executive Officer (CEO) of SAPO to concur with the Board in the appointment of personnel.  He felt that the appointment of personnel should be an operational matter.

Mr Wiltz replied that the provision had been copied from the Postbank Bill and had not been thought through.

Mr Van den Berg recalled the problems experienced as a result of the interference of the Board of Sentech.

Ms M Magazi (ANC) recalled that the Committee had discussed the issue of the CEO obtaining the approval of the Board concerning the appointment of staff.

The Chairperson suggested that the provisions in Clause 22 were reconsidered by the Department.

Mr Wiltz agreed to review the clause.  Clause 22 (1) specified the role of the CEO and the Board as well.

The Chairperson requested clarity on the provision in Clause 32 that the Bill would commence on the date of publication.

Mr Wiltz explained that SAPO was an existing entity.  Unlike the case of the Postbank Bill, an additional period of time was not necessary to allow for a new organisation to be set up.

The Chairperson asked the Parliamentary Legal Adviser to study the amendments to the Bill and to ensure that everything was in order.  He advised that the Committee would meet during the following week to continue the informal deliberations on the Bill.

The meeting was adjourned.