House of Assembly: Vol2 - TUESDAY 12 MARCH 1985
laid upon the Table:
To be referred to the appropriate Standing Committee, unless the House decides otherwise within three sitting days.
Introductory Speech delivered at Joint Sitting on 11 March
Mr Speaker, I move:
Hon members are all aware that during the past 12 months many so-called milk culture undertakings originated within the Republic. During this period these undertakings accumulated more than R100 million for themselves by offering unrealistically high returns on so-called investments in their various milk cultures. The abnormally high returns that were offered were justified by these undertakings by letting the public believe that some or other product, usually a cosmetic product, would be manufactured from a milk culture concerned.
However, those products did not materialize. The result was that more than 100 000 people participated in the different schemes and thousands of them incurred financial losses.
Although the estates of most of the persons who managed these undertakings or their companies have already been sequestrated or liquidated, it is general knowledge that literally millions of rand were withdrawn from these undertakings by the persons concerned and, in some cases, large sums of these withdrawals have not yet been traced.
The only recourse persons who suffered financial losses due to the operations of these types of schemes presently have, is in terms of the provisions of the Companies Act, 1973, the Insolvency Act, 1936, or the Close Corporations Act, 1984.
Hon members will appreciate that the Insolvency Act and, in certain circumstances, the Companies Act and the Close Corporations Act, were intended to provide for the regulation of an insolvent estate whether it be that of a natural person or a juristic person.
It was never the intention of any of these Acts to regulate a specific undesirable trade practice, with the result that creditors of some of the milk culture undertakings encountered difficulties in obtaining satisfaction in their endeavours to recoup their losses. Part of the problem lies in the fact that it is not always possible to provide the necessary proof that may enable a court to grant a provisional winding-up or sequestration order.
*Another difficulty is that a sequestration or winding-up application, as in the case of any other court action, is subject to postponement, and could therefore under certain circumstances be deferred or delayed for a considerable period of time. During such delays ample opportunity exists for a person in control of a specific milk culture undertaking to misappropriate for his own purposes money paid by the public to such an undertaking.
Despite the fact that a specific trade practice may at present be prohibited in terms of the Trade Practices Act, 1976, the need has arisen for the Government to be placed in a position to act swiftly and effectively when an undesirable trade practice has been identified and is causing harm to the consumer. It is important to take cognizance of the view of Mr Justice Marais, who stated:
In view of the fact that the Trade Practices Act, 1976, was originally intended for the regulation of specific trade practices, I deem it desirable to effect a number of amendments to this Act in order to resolve the problems I have already mentioned to this House.
†I must emphasize that the measures which are now being proposed are drastic and in certain respects contrary to general accepted legal practice, and are not the kind of measures one would resort to under normal circumstances. However, I am convinced that under the present exceptional circumstances such measures are completely justified, and although substantive objections were received from certain members of the legal fraternity, they are nevertheless supported by many members of the legal profession. In view of the recent developments it may happen that it will not be necessary to implement the proposed provisions. However, given the drastic nature of the proposed amendments required to deal swiftly and effectively with the present unique situation, I have regard to the fact that a more appropriate mechanism be devised to deal with such situations in future. For that reason I have accepted a proposal by the Standing Committee on Trade and Industry to refer the Act to the said committee with the intention of allowing the committee to investigate all aspects of this legislation and to make recommendations in regard to further amendments to the said Act which they deem fit.
I would now like to draw the attention of hon members to the proposed amendments. First of all, a definition of “revolving scheme” is inserted in the Act for purposes of identifying a particular undesirable trade practice which could effectively be dealt with in the following way. Initially the Trade Practices Advisory Committee, after investigating a particular trade practice, makes a recommendation to the Minister to the effect that that trade practice be declared a revolving scheme.
*On receipt of such recommendation and in terms of an amendment to section 15 of the Act, the Minister shall henceforth be empowered to declare that particular trade practice a revolving scheme by way of the publication of a notice in the Gazette. In the same or in a subsequent notice the Minister may direct that the business of any person who is or was engaged in that particular trade practice be wound up; furthermore, that the estate of any person who is or was engaged in that trade practice be sequestrated, irrespective of whether it is in his capacity as shareholder, director or owner.
A notice in the Gazette in which a winding-up or a sequestration is directed, shall then be deemed to be a final winding-up or sequestration order, as the case may be. This will have the effect that the Master of the Supreme Court immediately acquires control over that estate and may immediately appoint a liquidator or a trustee.
In order to prevent litigation arising in regard to the aforesaid steps which may be taken in terms of the envisaged amendments, the Bill also provides that the validity of a recommendation made by the Trade Practices Advisory Committee may not be tested in court. The same applies to the notice in the Gazette in terms of which a specific trade practice is declared to be a revolving scheme, and winding-up or sequestration is directed. Moreover, provision is being made that no court shall have jurisdiction to stay or to set aside any winding-up or sequestration order.
An important amendment is to be found in the proposed clause 4 of the amending Bill in which it is stated that any pending winding-up application shall immediately be stopped once a notice has been published in which the winding-up of an undertaking has been directed by the Minister. Clause 4 also provides that when such notice has been published, no steps may be taken which could culminate in the acceptance of a compromise between the undertaking and its creditors in terms of section 311 of the Companies Act, 1973. If such proceedings have already commenced, they may not be proceeded with.
Finally the Bill provides that costs incidental to a pending sequestration order or incidental to proceedings in regard to a compromise in terms of the Companies Act, 1963, shall be deemed to be part of the winding-up costs of the company concerned.
Second Reading resumed
Mr Speaker, the Bill before the House is intended to create legislation to control so-called revolving schemes. It proposes to do so by defining such schemes; by giving the Minister power to order the winding-up of companies that operate such schemes; by preventing the operators of such schemes from appealing to the court against such action by the Minister, and by making legislation retrospective.
There are three aspects which, I believe, we must consider: Firstly, the undesirability of revolving schemes, and in particular the scheme operated by Kubus Kwekery. Secondly, the means by which the Government proposes to control such revolving schemes; and, thirdly, the procedure of the Standing Committee for Trade and Industry when it conducted its deliberations that led up to the Bill which is now before the House.
Firstly, this side of the House has no dispute with the Government regarding the undesirability of revolving schemes. We do not any more than the Government want to see organizations such as Kubus Kwekery that take a lot of gullible people for a ride being able to retain their ill-gotten gains. I believe we made this clear in the standing committee right from the very beginning, and the proposals that we made to the standing committee illustrate this. In the first place we suggested that such a revolving scheme should be defined; secondly, that such schemes be made illegal; thirdly, that the Minister be given locus standi to apply to the court for the liquidation of a company operating such a scheme; and, fourthly, we said that the Bill should prevent a compromise with creditors because this could have the effect of releasing officers of a company from some of their statutory responsibilities. We have been consistent in our resistance to the removal of the authority of the courts, but as can be seen from the suggested amendment, we were prepared to go a long way with the Government to achieve consensus with their aims. This included acceptance, as far as this Bill is concerned, of the principle of retrospectivity. We do not like it, but we were prepared to accept it because of the special circumstances involved.
Secondly, there is the means by which the Government proposes to deal with the situation. We believe this to be a bad Bill for the following reasons: Firstly, its definition of a revolving scheme is unsatisfactory; secondly, it removes traditional powers from the courts and places them in the hands of the Minister; thirdly, it allows for no appeal against the Minister’s decision; fourthly, it is a hasty, ill thought out ad hoc measure, and the urgent need for this measure has, of course, now disappeared. It can no longer be argued that it has to be rushed through Parliament. Fifthly, a method can be arrived at that will achieve what the Government wants and what we want without doing violence to the legal system.
Government spokesmen have told us that they do not like this legislation any more than we do. They regard it as an unfortunate political necessity to be rushed through Parliament to deal with a particular situation— that created by Kubus Kwekery. Speed was the overriding consideration because otherwise the assets of Kubus Kwekery, allegedly in excess of R40 million in cash in the banks, would be eroded away and siphoned off as the legislation was prolonged, and there was also a danger that the people at Kubus Kwekery would deliberately prolong the legislation for that purpose.
This of course was not so. Mr Acting Justice Marais had some months ago wisely placed an order on Kubus Kwekery freezing its assets. The reason why the Government intended rushing this legislation through was that it wanted, for political considerations, to avoid any delay that could arise from legal action.
Paradoxically, it was precisely this that caused Government legal members on the standing committee concern because, by supporting the Bill, they were going against all their legal training and traditions. The very protection to which anybody is entitled under the law was now inconvenient to the Government. The delay involved in the due process of the law was to be the reason for placing the powers of the court in the hands of the Minister who henceforth would have the power to declare that a company should be wound up. The Minister was appointed policeman and judge of final appeal in terms of section 15A(1) and (4). Subsection (4) states that no court will have jurisdiction to pronounce upon the validity of certain recommendations and notices, or to stay or set aside such a winding-up order of the Minister. The effect of this is to remove the protection of appeal that any individual should have in a country that acknowledges the rule of law.
The question arises: Why is this Bill before the House now? Originally there was a fear that the assets of Kubus Kwekery would be siphoned off into the wrong hands, but these assets are now under the guardianship of the provisional liquidator because there was a provisional liquidation order last Friday, I believe, under the Companies Act.
We were given the undertaking that if we supported the Bill this bad law would immediately be supplanted by a good law, and the committee recommended that a thorough investigation into trade practices be immediately undertaken to bring this about. Let us test the validity of that undertaking. The heat is now off. The matter is in the hands of the provisional liquidator and this measure should now be dropped. The legislation should be referred back to the standing committee to be reformulated.
Mr Speaker, I am informed that the implementation of the provisions of this Bill will be a legal nightmare. It is by no means certain that the language of clause 4 will be effective in stopping the proceedings intended. Furthermore, the definition of a revolving scheme is so vague that it is able to include almost anything within its ambit— medical aid schemes, sectional title schemes and a host of actuarially calculated funds. The Bill consequently takes refuge in the phrase: “In the opinion of the committee.” We have had too much experience of this type of dangerous definition. We already have too many examples of the exercising of arbitrary powers by Ministers and the use of powers originally intended for one purpose to achieve a different end.
Perhaps one of the worst aspects of the Bill is that it creates a precedent for creating ministerial powers which bypass the courts. The prestige of our courts is battered but still intact. We do not wish to humiliate the courts further because this will do us considerable harm overseas with people who still retain a high regard for our legal system.
There are two aspects of the hon the Minister’s speech upon which I should like to comment. Firstly, if revolving schemes had already accumulated an amount in excess of R100 million over one year, and if 100 000 people were involved in that accumulation, surely the Government had ample time to produce satisfactory and sound legislation and bring it to this House, not a half-baked Bill such as the one we have before us. This has resulted in the type of ill-considered, dangerous legislation that we have now.
In the second place, I want to refer to the hon the Minister’s quotation of remarks made by Mr Acting Justice Marais. The hon the Minister said:
He then quoted Mr Justice Marais, as follows:
The hon the Minister himself then said:
I want to ask the hon the Minister what he thinks Mr Acting Justice Marais was talking about. What subject does he think he was addressing? I ask this question because anybody hearing the speech of the hon the Minister would conclude that Mr Justice Marais was referring to the necessity for the Government to be in a position to take swift action—the words of the hon the Minister— whereas that is not borne out by the rest of the judge’s remarks, namely:
The judge is therefore not even addressing the same subject as the hon the Minister who quoted him completely out of context. [Interjections.] In fact, the legislation before the House in no way improves the problem with which the judge is concerned because the winding-up process will still be conducted in terms of the Companies Act, the Close Corporations Act or the Insolvency Act.
I wish to deal finally, Sir, with the third aspect which I raised. This was the nature of the proceedings that took place in the standing committee and which resulted in the Bill that is now before the House. There have been two such meetings. At a meeting on 22 February there was general agreement in respect of most aspects of the Bill. However, the Bill was referred back to the law advisers to be redrafted. We have always believed it would be wrong in principle to disallow recourse to the courts. That Bill was referred back to the legal draftsmen who revised it completely; not just in one or two places, but from beginning to end. When that redrafted Bill came back to the committee it was the very first time that we had had the opportunity to call for evidence. We had no idea that when that Bill was referred back to us, that the right of recourse to the courts would be denied. When that Bill came back to us it had this provision in it—that the Minister’s decision was totally final and there was no recourse to the court. Consequently, before the committee had made any resolutions, I requested in writing that we call for written evidence from the Bar Council and from the Attorneys’ Association. That request was denied. I believe it is of fundamental importance in terms of the Notes for Chairmen of Standing Committees which specifically state that a standing committee cannot deny a request for evidence to be submitted in writing. We had the situation where that was denied. The request could not have been made earlier. Therefore, the chairman’s statement that this request came too late is complete nonsense.
Another aspect we want to consider, is that at that meeting the chairman read a memorandum he had received from the Cape Bar Council. What we want to know is whether a document like that is not the property of that committee. As far as I know, nobody other than the chairman had seen that document at that time. It has still not been circulated. This document sets out very clearly the reservations that the Cape Bar Council has about this legislation, and expresses its horror that the recourse that people should have to the courts in terms of this legislation will be denied them. That document, with the prestige that it carries, coming from the Cape Bar Council, could easily have swayed the opinion of many people at that standing committee meeting. However, they never saw it. The question arises: What is the situation if a standing committee makes a decision without evidence ever having been circularized to the members of that committee? [Interjections.]
If we intend to make this new parliamentary system work, bearing in mind the important role that standing committees play in this system, we have to establish what the situation is concerning evidence. Is every member of that standing committee as of right entitled to all the evidence submitted to that standing committee? I personally can say that I do not want to serve on a standing committee where certain of the evidence submitted to it is denied me. [Interjections.] I think that these two issues need to be established and cleared up, otherwise the standing committees are just not going to work.
I believe on those grounds alone this House should refuse to pass this Bill. Those hon members who sat on that standing committee had not seen the evidence that had been submitted to the committee and neither were the members on that standing committee allowed to call for representations which, in terms of the Notes for Chairmen of Standing Committees they are entitled to do. Moreover it is stated specifically in the Notes for Chairmen of Standing Committees that they cannot be denied that.
In view of what I have just said, I move the following amendment:
Mr Speaker, right at the outset of my speech I just want to deal very briefly with some of the last arguments the hon member for Walmer raised with reference to the procedure adopted on the standing committee. I am doing this especially because I am also a member of that standing committee.
To begin with, I want to mention that I do not think it was completely fair to the hon member for Vasco, who is the chairman of the standing committee concerned, to level so much criticism at him this afternoon. The hon member’s behaviour as chairman of the standing committee was correct throughout. In addition he is always lenient and without exception irreproachably fair. This was so in the present case, too, Mr Speaker. Hon members of the standing committee who are also members of the other two Houses of Parliament have on occasion gone out of their way to express their appreciation for the fine, precise and correct manner in which the hon member for Vasco dealt with the proceedings of the standing committee.
So I can say without reservation in public that we have a standing committee that performs its task thoroughly and with great success. Also in dealing with this particular case to which the hon member for Walmer referred …
Mr Speaker, can the hon member for Stellenbosch tell us whether he, as a member of the standing committee, had access to the document made available by the Cape Bar Association?
Mr Speaker, I am presenting my argument. I shall come to that aspect presently. [Interjections.] I said the Chairman dealt correctly with this particular case as well. The Chairman conveyed to us the contents of the memorandum of the Cape Bar Association. He read the contents of that particular document out to us. I also asked whether I could read certain parts of it during the tea break. I therefore had access to that memorandum. I also believe I had every right to read the above-mentioned document. In fact, the hon member for Walmer had the same right.
But you know what happened during the meeting of the standing committee, Mr Speaker? The hon member for Walmer— and I say this with great respect, because I hold the hon member in high esteem—got himself so tangled up in the procedure that eventually he himself did not know what was going on. I must honestly say that eventually I no longer knew what was going on either, but I think the hon member has only himself to blame for what happened. He definitely cannot blame the chairman of the standing committee.
The hon member for Walmer went on to point out that the urgency concerning this matter had now abated somewhat on account of the provisional liquidation order that was granted in the Cape Supreme Court last week. However, that is not the case. It is not correct. Let us take a look at what was reported in that respect in Die Burger of 9 March 1985. We read the following in the above-mentioned newspaper in connection with this provisional liquidation order, and I quote:
Then it was said that the return date was 17 April 1985. It is still more than a month from today. But we have an imminent situation that has to receive urgent attention, and must be dealt with immediately.
I could elaborate still further on this. Mr Acting Justice Marais said he had not gone into the reasons for the decision because, he said, and again I quote … [Interjections.]
Mr Speaker, does the hon member know what the consequences are of a liquidation order, which— as he says—is merely a provisional order? Does the hon member know what the consequences of such an order are? [Interjections.]
The hon member for Yeoville is obviously not aware of the fact that I am also a lawyer—as is he—and that I was after all, also in practice. So I know what the consequences will be. I do not know why the hon member is asking me this question in such a way, but he must just give me a chance to quote what Mr Justice Marais himself said. [Interjections.] Mr Justice Marais said he did not want to go into the reasons for his decision, and I quote:
That is what the learned judge said. Therefore I need not even reply to the hon member for Yeoville’s question, since the answer to it has already been covered by the judge’s statement.
The hon member for Walmer said that a number of lawyers, hon members on this side of the House who sat on the committee, were not completely happy with the legislation. I was one of those lawyers, and I make no secret of the fact. Now, however, I want to indicate why I, as a lawyer on this side of the House, nevertheless support this legislation. I want to begin by saying that the so-called milk-culture schemes, which stirred up such excitement in our country over the past few months, has become a part of the history of South Africa that I would rather had never been written. I am not proud of that part of our history. I want to say that those who participated in these schemes, and even those who ostensibly did so successfully, are in my opinion in general not proud of their share in this. We do not need that kind of thing in our country. In our country we need people who, through hard work, effort and sacrifice, share in the continued economic advancement and development of a stable South Africa. Opportunistic schemes such as this one which we have unfortunately encountered in recent times, are completely at variance with the kind of attitude and approach we need in this country in order to develop the kind of future we should like to foresee for all South Africans.
Even when these schemes were at their height, I never met anyone who was not sceptical about them. This also includes those who took part in them. They were not convinced that such schemes could go on indefinitely. They did not believe that their inputs would lead to viable products. They questioned the motives of the promoters of the schemes. Yet they participated in them. The Government warned the participants in September last year, through the hon the Minister of Trade and Industry, who was then Minister of Industries, Commerce and Tourism. However, those people did not listen. The hon the Minister warned them that the Government could not be held responsible for their losses. Nevertheless, they paid no heed to the warning.
Eventually this industry degenerated into an unsavoury mess, of which the Government now has to take cognizance. The Government cannot, of course, allow a few people to play cat and mouse indefinitely with 70 000 other people, who have invested R435 million in a scheme that has come unstuck. Some people got back only a portion or nothing of the money they invested. We are dealing here with a scheme for which the normal processes of the law in this country were not prepared, nor appropriate or adequate. To tell the truth, existing legal processes lend themselves to abuse in these particular circumstances, rather than to effective action. The courts have already been trying for months to unravel the incredible tangle that has developed here. [Interjections.]
The hon member should just listen to what I am saying. I am not suggesting—I would not suggest it for one moment—that our courts were unqualified or unwilling to bring these cases to an end. Not in the least. They were simply not able to do so because the legal resources at their disposal were inadequate.
Schemes of this kind are an unwelcome feature in the life of our country and must be rooted out completely. If unconventional measures are necessary for this, such measures must be adopted. If strong instruments are necessary for this, we must create them. This is why I support the legislation even though I do not like it. I can honestly say that I do not like the legislation, but I like what it is aimed at eradicating even less.
If we had come here today with a fine, peaceful and calm piece of legislation to be placed on the Statute Book, with wide rights of appeal to the courts, and if we had placed before the House a measure that satisfied everyone’s sense of justice, we would have achieved nothing. Then we might just as well have done nothing because we would have been wasting the time of the House, we would have been wasting the time of the courts, and we would not have discharged our responsibilities.
Of course, all the Opposition parties were opposed to the Bill and there is a very simple reason for that; they do not have to bear the responsibility. If I had been in the Opposition today, it is probable that I would also have yielded to the temptation of voting against the Bill today because then I would not have had to bear the responsibility either, and I could have been very sanctimonious about the pure ethics of law.
It is a simple fact that a Government can sometimes discharge its responsibilities only if it tackles a problem purposefully and not with kid-gloves. This is such a case. This piece of legislation is necessary in the form in which we now have it before us.
It is also necessary—I want to repeat this—that we look at it again with a view to the future. This is why we asked the hon the Minister to direct that, after the legislation had been passed and applied, the Trade Practices Act be re-examined. The hon the Minister agreed to this. We then want to do it calmly. We want to invite interested parties to come and give evidence in order to put their standpoint to us. We want to hear their arguments. Thereafter, we want to come up with a new piece of legislation to take this unwelcome phenomenon out of our lives for good. We want to come up with legislation that will satisfy everyone’s sense of justice. In the meantime, the measure that is before us is necessary.
From what I have said, it will be deduced that I at least have sympathy with those hon members who, out of honest conviction, have objections to the Bill, objections based on a legal-ethical viewpoint. But then these hon members must also show a little equilibruim, because, for the sake of equilibruim, I want to make it clear that this measure will not grant the hon the Minister unbridled power.
This is not the case because the fact of the matter is that the Trade Practices Advisory Committee will be fundamentally involved in terms of this measure. Firstly, the committee has to decide that a particular scheme is a revolving scheme. That is one of its functions. After that the committee has to make a recommendation to the Minister, and only then can the Minister take action. Therefore, without the input of the advisory committee the Minister can do nothing. That input is essential for him to take action.
The advisory committee of which I am talking is a widely representative body. In terms of the Act it is made up of 15 members, and they are representative of the marketing industry, the advertising industry, trade and industry, consumer affairs, and the mail-order business. It is therefore a body that is able to advise the Minister from a wide multi-disciplinary background. It is also a body that represents so many diverse interests that it is capable of well-balanced deliberation and advice. In such a body the viewpoint of one interest group will not dominate that of another.
I hope that this legislation will help to solve the problems being experienced with the existing revolving schemes quickly. I also want to say that if this is not the case I want to make an appeal to the hon the Minister not to hesitate to introduce further legislation during the present session. I can foresee, for example, that it could perhaps become necessary, in view of the developments that will follow, to consider further legislation in order, for example, to regulate the administration of the schemes in greater detail. It will all depend on what happens in future and that will become clear to us during the next two or three weeks.
It is necessary here to give an indication to the public so that those who are inclined to waste their entrepreneurial spirit and their indisputable originality on such notions will know that the Government is determined to clamp down finally and effectively on their activities.
As a lawyer I am therefore prepared to support this Bill, and I do so with pleasure.
Mr Speaker, the hon member for Stellenbosch has hit the nail on the head. The hon member said that as a member of the legal profession he would have voted against the Bill if he had been a member of an Opposition Party. The legal personage in him therefore convinces him that he should do the right thing and vote against this Bill but his ties with a party and what may possibly eventuate from this court case compel him to vote in favour of this Bill. What he has told us today is that the legal personage in him cannot vote in favour of this Bill. The portion of the hon member belonging to the NP, however, compels him to support this legislation.
Mr Speaker, on a point of order: Is the hon member for Langlaagte entitled to misquote the hon member for Stellenbosch deliberately? I think it was very clear to all of us and you, Sir, were able to take note of the fact that the hon member for Stellenbosch said a short while ago: “Ek sou in die versoeking gestel gewees het …” The hon member for Langlaagte has therefore deliberately misquoted him. I ask you to find on this.
No, I do not think it was a deliberate misquotation. The hon member for Langlaagte may proceed.
Thank you, Mr Speaker. The hon member for Vasco who is the chairman of the standing committee naturally has a problem. A legal personage such as he is cannot support such matters but, if one is a chairman, one obviously has to do so.
We are faced with a thorny problem today. If we look at milk cultures and their results, we find a great problem has arisen round them. It was clear to anyone with a knowledge of business that what started here as a chain letter was merely converted into a business transaction. Product A is created just like a chain letter to be followed by ten supplements and ultimately the population of South Africa is not large enough to provide buyers for the final product.
Anyone can see that this process forms a spiral. It works just like an ordinary cream separator: The cream goes to one side where there is someone to skim it off. The public therefore participated in a process in which many of them were totally unaware of being defrauded.
We should acknowledge, however, that the hon the Minister and his department should have been aware of this within two or three weeks after the first placing of advertisements. Nevertheless these practices continued for six or seven months. The hon the Minister submitted various reports and the SA Police investigated the case but the standing committee did not have the benefit of this. The Commercial Branch of the SA Police investigated the case. The hon the Minister himself instructed the Trade Practices Advisory Committee to investigate the case but that report was never submitted to us as a committee. I wish to refer to an article which appeared in Die Burger of 2 October 1984 in which was said: “Skokkend. Opsienbarend. Kritiese verslag oor kubusse.” Who published that report? The Trade Practices Advisory Committee. Where is that report? Was it laid before a committee or a standing committee? No, that report was not submitted to us. Where is the report of the Commercial Branch of the Police? That was not submitted to us either. At the NP Congress the matter was discussed in detail by inter alia the hon the Minister. He said then that because of great dissatisfaction and concern he would act quickly but that the public should make sure of what they bought. He therefore also warned the public. We know his task is difficult. He said further that he would not prohibit the manufacture of all products here. Die Burger questioned him on this. He replied that the manufacture of products for which a market existed would not be prohibited. Did a market exist for the product of that milk culture?
I am asking the hon the Minister. Does the fact that people buy something indicate there is a market for it? After the steed has escaped, the hon the Minister wishes to introduce legislation in contravention of all accepted legal practices in the country. The only time when this type of suspension of all elementary legal practices is justified is when the safety of the State is at risk, and not as regards something such as this. It is stated: “No court shall have jurisdiction to pronounce upon the validity of a recommendation referred to in section 4C(a) or a notice referred to in subsection 1(a) or (b).”
For example, Corlett Drive.
I am pleased the hon member—I wish to refer to him as Balaam’s ass …
Order! The hon member should not make such allusions.
I withdraw that, sir. In this respect one may refer for example to Glen Anil. I served on a committee investigating Glen Anil. What happened there was nothing but camouflage and providing protection to certain people. It occurred in consequence of the practices of certain banks. The committee dealt with the matter in such a way that it was unnecessary for a court to take steps. Regarding the milk culture industry, I think there is also a degree of secrecy. Legal processes have already proceeded so far that provisional winding-up has been ordered. By this time the assets of the company concerned must surely have been frozen already. The Minister is now requesting the right, however, to have shareholders and everyone involved in the industry declared insolvent, to be placed under sequestration. What is to be done with the GST already paid? What is to happen to people who made small fortunes from the industry but were not shareholders—only investors? If we may have the court’s definition of what constitutes an investor and what a shareholder, we shall be reassured to some degree. Here the execution of the law passes into the hands of the Minister. I am truly concerned at this moment. I believe that a revolving scheme is wrong and should not be permitted. Can we not by definition give the court the right to declare a revolving scheme null and void? Let us define such a scheme and let the court then decide whether some trade practice or other is a revolving scheme or not. A Minister would then far more easily be able to obtain the right to apply immediately to have such a scheme stopped merely by proving it a revolving scheme. It is to be deprecated that legislation should be made retrospective. Clause 5 of this Bill provides that this legislation “be deemed to have come into operation on 1 August 1984”. I do not like retrospective legislation. [Interjections.]
There is an hon member who has put questions about Corlett Drive on a number of occasions. Permit me the opportunity to tell him that Corlett Drive was only once under judicial management and that I had this done. I was one of the major shareholders and together with other people requested an application for the company to be placed under judicial management because one of the directors was abroad.
The point I wish to make this afternoon is that legislation of this nature can only be put on a statute book when the safety of the State is involved. I cannot understand how advocates of the Supreme Court in this House can permit that a person be denied an appeal to an appeal court against a decision a Minister makes against him. This is our reason for opposing this legislation.
Mr Chairman, it was very difficult to follow the hon member for Langlaagte’s arguments because on the one hand he accused the hon the Minister of dilatory action—without saying how the hon the Minister should have acted—and now that the Minister is taking steps, he is complaining about them. He accused the hon member for Stellenbosch of speaking against his better judgment but I wish to suggest that he is speaking against his own better judgment and that he is being led by his party in this respect. [Interjections.]
Order! Hon members should accord the hon member an opportunity to make his speech. They do not have to agree with what he is saying but they should listen to what he is entitled to speak on in conformity with the rules of the House. The hon member may proceed.
Thank you, Mr Chairman. It is very easy to talk academically and in a vacuum about this matter without referring to facts. We have the facts before us and we should give them our attention. The inspectors appointed by the hon the Minister to investigate this matter have now come up with a report. That report is to hand. What does it prove? We should examine the facts. The facts are that, according to Mr Nieuwoudt’s own evidence, there could have been just under R90 million involved in this. Facts indicate that that company was insolvent from the start and it could therefore not pay its creditors. In spite of that Mr Nieuwoudt bought himself a luxury car for approximately R50 000. He himself received R3,6 million from this company in part purchase of the cubus technology and a further R2,4 million as a private grower. A company of which he was the sole proprietor received more than R500 000. His brother-in-law received R2,5 million in cash. Large amounts were paid to so-called consultants. Approximately R10 million was paid out which was highly dubious. Of that R10 million at least R6,7 million was paid to Mr Nieuwoudt himself. Furthermore, at one stage he sold 70% of the shares in this company to a company called Ariate. He sold his shares for R6 million. In addition he was entitled to receive R162 million per annum from this company. By coincidence this company did not even have a bank account. If the company defaulted on payment, it could cancel the contract only within about a year. For approximately a year therefore the cubus company would be under the control of Ariate without that company having paid a cent.
It is small wonder that the inspectors decided that Mr Nieuwoudt operated this company recklessly and for the purpose of defrauding creditors. I should like to read what the inspectors specifically found in this respect. It appears on page 10 of the report.
Where is the report?
The report became available yesterday.
Why do you have the report and not the other members in the House as well?
I asked the department for the report and it was made available to me as I understood it had also been made available to all the papers.
No members on this side of the House received a copy. [Interjections.]
Order! The hon member may proceed.
I should like to refer to page 10 again where the following appears:
The date of that report is 6 March of this year and it is stated: ”… en steeds bedryf word.”
Mr Chairman, may I ask the hon member whether he is suggesting that we in the other parties in this House, the less privileged parties, should have read the newspapers in order to have gained an insight into this report? [Interjections.]
As I said, I assumed this report was at the disposal of all who asked for it or wished to do so. The fact is that on 6 March those persons were still operating that company in a reckless way.
What do the PFP and the CP actually want to say to this Parliament and people outside this Parliament in connection with this case? They want to say that while this reckless conduct continues, while approximately more than R50 million is involved in it, while there are 70 000 shareholders, while doubt exists on this case, this Parliament and this Government should sit with folded hands. [Interjections.] Is that what they want to say?
Are you saying the courts are incompetent?
I shall get to that. I wish to say, however, that in the judgement of the hon the Acting Justice Marais there are strong indications that these are exceptional circumstances incapable of being duly resolved by our present legislation. [Interjections.] It is the responsibility of this Government to see on behalf of those creditors that this case is resolved as speedily and as justly as possible and we shall not evade that responsibility.
It has been argued by the hon member for Walmer and also the hon member for Langlaagte that a provisional winding-up order already exists and, as that is so, this measure is no longer necessary. It is necessary for three reasons: In the first instance, it is not a final order. That provisional order may be revoked. Do those hon members perhaps wish to propose that we run to Parliament again to pass this legislation if the provisional order is revoked? Are we to ask Parliament to take steps in consequence of that action? [Interjections.] We cannot allow it. This Bill further authorizes … [Interjections.]
Order! The hon member for Innesdal may put his question to the hon member for Jeppe outside the House if he wishes, but he is taking up the time of the hon member Mr Schutte and making it difficult for him to speak. The hon member may proceed.
This legislation provides authority for the estates of those involved also to be sequestrated. That authority may well be necessary. For that reason, too, this legislation is essential.
In the third instance, interim action with regard to other institutions is most probably necessary.
I now get to a further argument. I have not yet heard any arguments from either the PFP or the CP in favour of unsound trade practices. They are all in favour of their being declared illegal and that revolving schemes are not in the interests of the country. If they should be declared illegal, what of the consequences of this? What is to become of that money which has been accumulated? There has to be legislation to deal with it. That is what this legislation is doing—albeit on a temporary basis. I hope that will be the case. Legislation is necessary, however, to deal with it. [Interjections.] It is very clear that the Companies Act and the Insolvency Act are not directed at controlling such circumstances. It is therefore quite possible that a company implicating itself in a revolving scheme is not insolvent and, in consequence, cannot easily be wound up.
A further aspect is that so many creditors are involved in such circumstances that it is not readily possible to establish whether such a company is insolvent or not and whether it is to the benefit of creditors for such a company to be wound up.
Does the hon member believe that the type of legislation he is describing should cut out the right of appeal to the courts?
I made it very clear that this legislation was not the answer. I wish to concede immediately that this is not the ideal legislation. That is why we requested the hon the Minister to refer this matter to the standing committee again. The hon member for Walmer is quite right and I grant him that. The facts I gave him, however, represent a situation requiring attention which we just cannot evade. We cannot run away from it; we cannot run away from our responsibility to these people. [Interjections.]
I have already referred to the fact that the judge’s finding must be one of the strongest justifications for the hon the Minister’s action. We are dealing here with an illegal act of unusual extent and one which involves the public. We cannot resolve this unusual situation with usual measures. The Acting Justice in various paragraphs referred to these circumstances as being unique. I need refer only to page 4 where he says:
In whatever context this was used, the fact remains he referred to them as unique circumstances.
Certain hon members referred to the retrospective nature of this measure. I wish to suggest with great respect that we are not dealing with the usual retrospective effect here. This is no situation in which we wish to legalize illegal action of the past or in which we wish to declare legal action of the past illegal. All we intend here is for valid actions entered into in the past, such as the declaration of these companies’ activities as illegal, to remain valid also as regards winding-up which may follow upon this. In other words, it is not retrospective in the usual sense of the word.
I should like to refer the hon the Minister to page 4 of the finding of the Acting Justice, where he expressed his concern on the question of whether the ordinary winding-up procedure would have a just result in this case. In other words he says the Insolvency Act in his opinion does not draw a distinction between people who have already made a profit and those who now for the first time require a return of their investment. To my mind this is possibly valid criticism the judge is expressing here and I therefore request the hon the Minister to pay serious attention to it. I have pleasure in supporting the legislation.
Mr Chairman, this is a stopgap Bill for one particular purpose. The purpose of the Bill, as far as I can see, is to stop swindlers and conmen from defrauding the public via, particularly, these revolving schemes. I think all and sundry will agree that the Bill as it stands is by no means the sort of legislation that we would like to see permanently on our Statute Book but it will, as an interim measure, hold the position until such time as proper consideration is given to a Bill by all interested parties.
Although I think one must agree that caveat emptor is a fair enough maxim in most business situations, in some instances these revolving schemes are so cleverly presented and so tempting that the public does need some sort of protection, and this, I believe, is what this Bill seeks to do. At first glance one gains the impression that the Minister is being given wide powers, and that he can administer ad lib and without any let or hindrance.
And at second glance?
Be that as it may. That is the hon member’s opinion; I am entitled to mine.
However, many of the powers that we are talking about, the Minister already has under the authority of the Trade Practices Act of 1976. This Bill is in respect of declaring a business a revolving scheme, and the things the Minister may do if it is declared a revolving scheme.
I am utterly amazed at the enthusiasm that one finds among certain people to protect a lot of gangsters and criminals. [Interjections.] I am hanged if I can understand it. The Companies Act is circumvented by clever legal men—I am not criticizing them; that is their job—in so many ways, and so many times, that one wonders if an honest man in business really is being given a fair crack.
I admit that this measure does appear to be somewhat Draconian, but at the same time, whom are we trying to protect the public against? We are not protecting the public against legitimate businessmen who are trying to do a decent business deal. As far as I am concerned, these people go into this sort of business with the firm intent to defraud the public, and I and my party believe that there should be very scant mercy for that type of operator. [Interjections.]
As far as we are concerned, the question of their having no appeal to a decision being taken, is not quite true. In the event of the Trade Practices Advisory Committee reporting to the Minister, the Minister has to publish such report in the Gazette, and the relevant company have 30 days in which they can argue the matter with the Trade Practices Advisory Committee. This committee does not only consist of the Minister. The Minister is not God Almighty in this particular case. There are a number of bodies that are represented here and that can say to the Minister: We believe that these people should be declared so and so. Among the bodies represented we have the Afrikaanse Handelinstituut, an Indian representative, a Coloured representative, the grocery manufacturers, the South African Confederation of Labour, the Society of Marketers, the South African Consumer Council, Mail Order Association, Assocom, the Garment Workers Union, the SA Furniture Traders Association, the Advertising Standards Authority, Consumer Council, motor industries etc. These are not irresponsible organizations. If they, having investigated the issue, say to the Minister that this is the sort of body one should accept as being a revolving organization which has only one purpose in view, namely to defraud the public, then the hon the Minister, in my opinion, would be totally irresponsible not to hammer the hell out of it.
As regards the question of swindlers being sequestrated, that does not cause me any qualm of conscience at all because I believe in there being some form of morality. The criminal should not enjoy the fruits of his criminality and criminal acts.
Mr Chairman, may I ask the hon member for Umbilo whether he suggests that the 70 000 shareholders whom the hon member Mr Schutte referred to are all criminals and swindlers? Are they not in many cases people who were conned?
Then why should they be sequestrated?
No, I do not think the intention is to sequestrate them.
But look at the Bill.
I do not read it as saying that. Maybe I misinterpreted that, but I do not read it that way.
Read it again and you may change your mind.
I certainly do not read it as saying that in this instance. [Interjections.] I am sorry, but I certainly did not read it as saying that and, until such time as I can be convinced, I obviously cannot change my viewpoint in this regard. Therefore, as far as I can see, swindlers should not enjoy the fruits of their swindling. So I have no qualms on that score.
However, I do have one problem with this Bill which to me is quite a serious problem, but as the main principle is generally to protect the public, it involves a principle which is of a lesser order than the first. That is the question of retrospectivity, making the Bill retrospective to August 1984. As far as I am concerned there is a bad principle involved here, and that is that if an action considered a crime was legal at that time and this Bill is made retrospective, this principle can in future be applied almost in any direction. I am perfectly well aware that the concept of making Acts retrospective, although frowned upon by the legal fraternity, has, in fact, been applied many, many times. In other words this would not be a precedent. At the same time, however, most of these laws including retrospectivity deal with matters that are somewhat different to this in that they are there to make actions legal which were illegal at the time. I am not suggesting that it only involves those instances. It could be a question of a person receiving certain benefits by making a provision retrospective, and that sort of thing. This measure, however, does create an odd situation in that, if one accepts this kind of retrospectivity, one gets the feeling that almost anything can be made retrospective; and this is the part that worries me somewhat.
Mr P C CRONJÉ: More than just a feeling.
Yes. It could even make the hon member or me, for that matter, an illegal member of Parliament, I suppose. If one accepts that kind of retrospectivity, this could happen and that is what worries me.
We are going to support this Bill because, as we read it, it is necessary as an interim measure. It is going forward for further consideration with a view to producing a Bill which will be more generally acceptable. What is of great importance to me, however, is the fact that the Trade Practices Advisory Committee is not an irresponsible body and is not likely to declare a company as a Revolving company lightly. All this measure deals with, as far as I can see, is these revolving schemes. As far as the other aspects or other types of companies are concerned, the Minister already has considerable powers to take steps. So, while we accept the principle of this Bill and will give it our support, we express a certain strong unhappiness at the fact that it is being made retrospective.
Mr Chairman, as usual the hon member for Umbilo made a very good and constructive speech. I always enjoy speaking after he has spoken because I enjoy congratulating him on his speeches. When I look at him I always think to myself: What a good contribution and what wrong political convictions! That is really a great pity because if only his politics were right he would be a very great asset to his side. [Interjections.]
I agree with the majority of the arguments raised by the hon member for Umbilo. I shall deal with his one single objection presently. The only problem he has relates to the principle of retrospectivity, and I shall come to that at a later stage.
I think I should deal immediately with the personal attack on me by the hon member for Walmer. It related to the performance of my duties as chairman of the standing committee. If we must analyze our internal situation here for a moment and make public some personal matters, the hon member for Walmer will perhaps recall that on 22 February we convened for the first time. I acceded to a request by the hon member for Walmer and reached an agreement with him that on that day, because he could not be present, we would merely hold informal discussions. We would hopefully not adopt any formal resolutions in order to afford him an opportunity to attend the subsequent meeting. That is the attitude I tried to adopt in regard to this matter, and in regard to every member of that committee too, with a view to stimulating a completely free flow of ideas and an exchange of opinions. [Interjections.] That day we found that the hon member for Walmer was not present. We were sorry about that. On that day we first put the hon the Minister’s amending Bill to one side. We as a committee gave the legal advisers additional terms of reference incorporating quite a number of the objections mentioned by the hon member for Walmer. There were five things they had to do for us. Firstly they had to define the concept “revolving scheme”. The hon member for Walmer had asked for that and we accommodated him. The legal advisers also had to investigate the right of appeal. In addition, to make allowances for the present situation, they had to investigate the desirability of the inclusion of the provision for the retrospectivity of the legislation.
Because we realized that the winding-up issue was a contentious one, they also had to report on the desirability of the provision involving the immediate winding-up that was to come into effect after the Minister’s decision.
For the rest the legal advisers were to investigate the legislation in general because, as it stands at present, it has proved inadequate. The hon member for Walmer is free to have another look at the original legislation. In view of the interjections that were made I know that the hon member of his party who is to speak after I have spoken is going to make a great fuss of the 70 000 individuals involved in the present situation. The hon member must have a look, in regard to those people, at what the difference is between the original legislation and the amending Bill now before us. I put it to him that we specifically instructed the law advisers to grant those people protection. In its original form the legislation was unacceptable, but a considerable number of improvements have now been effected. If the hon member were to read it through carefully, he would see that we have succeeded, by way of the amendments before the House today, in submitting legislation that is better than the original legislation.
The law advisers carried out their terms of reference and submitted their proposals to us. It was the committee’s unanimous terms of reference, but in the execution of my duty as chairman the hon member attacked me.
I now want to state very clearly that certain unanimous resolutions were adopted. We unanimously resolved that it was desirable to have this legislation passed. With the exception of the hon member for Umbilo and the hon member for Langlaagte we also unanimously resolved that the relevant legislation should be retrospective in effect. We also unanimously decided on the desirability of passing legislation relating to revolving schemes, regardless of whether we agreed with the definition or not.
After all this had been decided, we began to deal with the separate clauses of the Bill. Everything went very well. Now and then someone raised an objection or asked a question. I did everything in my power to oblige hon members of the standing committee. I want to emphasize that, because I think we ought to take note of it. Once again I am trying to accommodate all hon members, and in spite of the hon member for Umbilo’s absence, I am having it recorded that he objects to the retrospective effect of the measure in terms of clause 5. That is the spirit and the attitude I tried to establish and maintain in that standing committee. In future I shall also try to adopt the same spirit in all my dealings.
After the hon member for Walmer tried, by way of a substantive motion, to have his approach to the measure accepted by the committee—he also unsuccessfully tried to force a division—he suddenly put it to me that he wanted the committee to hear evidence and to ask certain people for advice. When the hon member came to light with that proposal we were, I think, already discussing the third or fourth clause of the Bill. The hon member requested, amongst other things, that the Cape Bar Council be asked to submit a memorandum. I said at once that I first wanted to ascertain what should be done and therefore adjourned the meeting so that I could approach the Speaker with a view to obtaining finality about the authority or jurisdiction the chairman of a standing committee had in a case such as this.
At our subsequent meeting I explained to the hon members of the standing committee that a standing committee was an extension of Parliament and that in a standing committee meeting the Chairman was invested with the same powers as you are in this House, Mr Speaker. Consequently I put it to the hon member for Walmer that I would accommodate him as far as possible. Instead of asking him to make a proposal on which I would give a ruling, I requested him to move a substantive motion and then to have the committee decide the issue. With all due respect, Mr Speaker, I really do not think I could have treated the hon member more fairly. Instead of deciding on the hon member’s proposal myself, I agreed to have the committee pass judgement as a whole. The hon member subsequently moved his motion and I put the matter to the vote in the committee. In all fairness and justice the hon member should at least have said here in the House that his motion was negatived by the standing committee.
The hon member for Walmer also neglected to mention here in the House that at no stage did I conceal the fact that I had received the memorandum to which he referred here earlier. Indeed, I quoted certain passages from it to the committee because I desired—and I made this clear to the committee—to have all hon members of the standing committee completely au fait with the …
Mr Speaker, will the hon member tell the House why he did not make the memorandum available? Why was it not issued to the members of the standing committee? [Interjections.]
Mr Speaker, in the standing committee meeting I informed hon members about having received the memorandum and about its being available. I added, however, that its content had nothing whatsoever to do with that of the legislation under discussion. I sketched the whole situation for them. Thereupon the hon member Mr Schutte moved a motion in which it was stated clearly that the committee would neither request nor receive any evidence or memorandums. That was the positive motion that the hon member Mr Schutte moved.
Is that now what you call positive?
Mr Speaker, the hon member for Durban Central does not know what he is talking about. [Interjections.] Let us, however, take the matter further; then we shall see whether the hon member for Durban Central is still as vociferous.
I just want to know what is positive about the motion you have referred to.
Mr Speaker, the hon member for Durban Central may continue, at a later stage, with the comments he apparently wants to make. I did not, however— and I want to emphasize this—ever conceal or deny the fact that I had received the memorandum of which the hon member for Walmer spoke. I purposely informed the standing committee of it. Surely I am not the only one who received an amendment. Or does the hon member for Walmer’s argument apply solely to me? Does it apply solely to me and not to other hon members of the standing committee too? What now of every hon member’s inherent right to request and receive memorandums and to make their contents public to other hon members of the standing committee? I want to state categorically that the hon member for Walmer himself received a memorandum. What happened to that?
I gave it to you.
The hon member made it available to me in part, yes. He did so in confidence. Do you know how he went about it, Mr Speaker? He did not reveal the source of that memorandum to me. That is now the holier-than-thou manner in which certain hon members conduct themselves here. Nor did I ever say that I had not received the relevant memorandum; on the contrary, I made the content known to the committee in summary form. They adopted two resolutions about it. If the argument the hon member is presenting me with is a valid one, surely he should submit himself to it as well. At one stage, however, he said he had received it in full. I think the committee should take note of that. In my opinion it is a good thing this debate is taking place today. In the standing committees we are still going to hear many similar arguments, with many decisions having to be taken about such conduct. It is therefore a good thing for certain traditions to crystalize and for certain trends and established practices to be entrenched in the course of time. As far as I am concerned, I have always acted in good faith, having tried to treat this hon member as accommodatingly as possible. I want to give him the promise that I shall be doing so in the future too.
I now want to come back to the legislation itself and put a question about the true essence of this legislation. The hon member for Walmer himself accurately summed up its essence. The essence is that after the hon the Minister has made his decision, the existing legislation will apply to companies and to insolvency, to which no amendments whatsoever have been made. In a nutshell, the overall effect of this would be to implement and expedite the process that would eventuate in the winding-up. There are two limiting conditions, which the hon the Minister may not ignore and which will therefore serve as safety valves. Firstly the Minister must act in accordance with a written submission made to him by the Trade Practices Advisory Committee. That is the first protective measure. Secondly there is, even now, the right of appeal, in terms of the existing legislation, in the case of companies and insolvency. The relevant company or individual can therefore adopt the normal procedure and still take the case to court.
At this stage, in the present circumstances, I have no objection to supporting the legislation in this form.
Mr Chairman, I believe that some of the matters arising out of the speech of the hon member for Vasco cannot be left as they are, even though I would have liked to leave what happened on the committee to one of his colleagues on the committee to deal with, as I was not present there.
I do, however, want to address just one particular aspect. That is the issue of a memorandum which is given to the chairman of a committee. I think there is a fundamental difference between a memorandum which a chairman of a committee receives in his capacity as chairman, and a representation which an individual member of a committee receives in regard to that matter. With great respect, I think it would be a fundamental wrong if a chairman of a standing committee received a memorandum in regard to the content of a Bill before him, without circulating that memorandum among the members of that committee. [Interjections.] It will be a fundamental wrong. Furthermore, there is a fundamental difference between the position of a chairman and an ordinary member of a standing committee. Ordinary members may be lobbied, they may be canvassed or told things but, when one is the chairman of a committee, one’s duty is to see that the members of that committee are informed.
I do not know whether I have the memorandum which the hon member for Vasco suppressed, but I venture to suggest to the hon member for Vasco that that memorandum …
Surely that is not true.
I said “suppressed”, because I listened very carefully to what the hon member for Vasco was saying. He did not say that he had read the whole memorandum. He said he had read extracts from the memorandum to his committee. Is that correct? The hon member nods in agreement. Fact is then that he did not distribute the memorandum among the members of his committee. That hon member is a lawyer, and I do not cast any doubt upon his ability as a lawyer; on the contrary, he is probably a very good one but he knows therefore that if …
Mr Chairman, may I put a question to the hon member?
No, I do not want to answer questions now. If then the hon member for Vasco knows the law, he also knows that the test is whether the committee may have been influenced by the memorandum, if the full memorandum had been put before them rather than the extracts which the hon member read.
Therefore I must say that I am a little surprised that when a committee, dealing with what is a Draconian measure, gets a memorandum which comes from among the highest legal bodies in the country, that memorandum is not circulated to the whole of that committee so that they may consider it. I believe—I may be corrected if I am wrong— that when a person or an organization gives a memorandum to a chairman, it believes it gives it to him in his capacity as chairman so that the committee will be made aware of it. [Interjections.]
That is the test, and that is why perhaps you, Mr Chairman, might consider discussing this with Mr Speaker, because if it is true, as the hon member for Vasco says, that one is entitled to suppress a memorandum, read out what one likes and keep the rest, then I think that is a very bad principle with which we are dealing.
It’s a shame.
Did that hon member say “Dit is ’n skande”?
Yes. Why didn’t he ask for the memorandum? He could have.
What that ignorant hon member at the back—that is quite parliamentary, Sir—does not understand is that it is the chairman who has certain duties. This is the same type of argument as the one we had about the question of the report of the inspector. Is there such a thing as Parliament which is to be given documents or must we watch the Press very carefully to see if anybody says something which relates to debates which are going to be conducted here, something which one member may get and others not?
There is a principle involved and therefore one cannot tell me that we have to be treated as MPs in a rather strange way so that we have to watch Die Burger to see whether in the bottom righthand corner on some page there is something that might be relevant to some legislation with which we are dealing.
There is another aspect with which I should like to deal, but before I do that, let me say that the hon member for Umbilo has a sort of a charming, jovial manner. He reminds me of Billy Bunter in our youth in that he comes along and says something quite innocently but which is actually rather naughty. His attitude is—he uses those words—that he cannot understand why there is this enthusiasm to protect gangsters and criminals.
I do not see any enthusiasm to protect gangsters and criminals; on the contrary, the hon the Minister has to account to this House for the fact that he did not act earlier. He has to account for the fact that, according to his version, there are 100 000 or more people who got involved in this scheme because he allowed the criminals and gangsters to do what they liked. He has to account for the fact that the hon member Mr Schutte has said that there are 70 000 shareholders. I do not think all those 70 000 shareholders are gangsters and crooks and criminals. Somebody, however, has to account for the fact that there was such a delay.
While he is doing that, and in view of the fact that we are expected to read the newspapers, the hon the Minister may also explain why he does not heed appeals that come from the Opposition, are published in the Press and call upon him to take action under the Trade Practices Act. Why does he not take notice? I shall tell the House why: Because he suffers from a complete misconception of what the free market is in South Africa, and 100 000 people have been sacrificed on the alter of his misconception of the free market.
If he believes what he preaches, then why is he introducing this Bill? Because, in accordance with his concept, when one enters this jungle of the free market, it is a free-for-all and as long as one acts within the existing law one can do what one likes. One can exploit people, one can take them for a ride with these schemes because that is the market mechanism, that is capitalism, that is free enterprise in accordance with the definition of the hon the Minister. Then, when he is in trouble, when he is under political pressure, when those 100 000 people and others are starting to do things, suddenly the free market goes out of the window and we have legislation which is as Draconian as one can possibly get it.
Where does he actually stand in relation to this issue? The reality is that he is the last person who should do this. The truth is—I think it needs to be told—that were it not for the efforts of the Press, the newspapers in South Africa, with their investigatory journalism and their publication of the facts, there would still be people today who would be falling for this joke. I think somebody on the NP side should have stood up here to say thank you for the investigatory activities of the Press in South Africa. Somebody should have said: “You brought this to our attention and forced us to take action.” This is the reality, even though the NP ignored what we in the PFP told them.
Why was it that, until the major exposés appeared, particularly in the Sunday newspapers, there was no action? This needs to be explained. It needs to be explained why we are now in this situation and why no action was taken as early as September last year or even much earlier than that. The whole matter started much earlier than September 1984—I received a copy of the report a few minutes ago. Why was it allowed to develop to this?
I would like to give an outline of my reasons for not supporting this legislation. I would like the very criminals and rogues who did this to be dealt with. I have always believed in the Trade Practices Act and the rules of the game. I have always believed that one must not exploit people who are tempted by reason of their ignorance, their gullibility or sometimes their greed, to fall for this. I believe that they need protection in this system. I now find myself in the rather unfortunate position of being proved right, whereas the hon the Minister by introducing this legislation is being proved wrong.
What are we doing now? Firstly, we are creating a law in which there is no opportunity actually to oppose a liquidation. There is no opportunity for a hearing. There is no opportunity to oppose the sequestration.
The hon member for Umbilo, again with his—there is a funny word for it and I am looking for it—charm, his bonhomie, says: “Oh, you cannot say there is no opportunity for a hearing”. If the hon member had read the Act, he would have seen that the Trade Practices Advisory Committee has the power to subpoena people. Such people have the right to make a written representation, but they have no right to be heard or represented. When the Trade Practices Bill was before the House and we argued it, we asked for that very right and members of the party he belonged to then supported us in that.
So, one has no right to be heard and to argue one’s case when it comes to the making of a decision as to whether it is a trade practice or a revolving scheme that is undesirable. One only has a right to submit written representation, and one has no right to oppose the sequestration.
We believe in the audi alteram partem rule. It is a fundamental concept of our law. One cannot affect the status of a person— because this is what happens with sequestration—and then not give him a hearing. As this law stands at the moment, completely innocent people such as, shareholders can be sequestrated. One needs to take urgent action …
Mr Chairman, I would like to ask the hon member a question in connection with these people being able to appeal to the Trade Practices Advisory Committee in writing. Is the Trade Practices Advisory Committee precluded from, or do they have a record of not giving people who wish to give verbal evidence the opportunity to do so?
I think it is a fair question. One of my complaints against the hon the Minister is that insufficient matters are referred to the Trade Practices Advisory Committee and that they do not take sufficient action. I think it is open to them and I believe that they do give people hearings. It is open to them, and I believe that they do give people hearings. It is open to them, but there is no right to be heard. That is the fundamental difference. The audi alteram partem rule involves a right to be heard. That is the fundamental difference. The audi alteram partem rule involves a right to be heard and that right is absent.
I want to get back to what I was going to say to the hon the Minister. If one wants to take action to sequestrate someone, one can amend the Insolvency Act, the Close Corporations Act and the Companies Act to give the Minister locus standi to make the conducting of a revolving scheme grounds for liquidation. One can let him have the power to move ex parte so that he can get an order. On an ex parte application there is, however, still the right to appear on the return day or the right to anticipate the return day, so that the right to appear, to oppose and to have a wrong corrected if a wrong has been done, is not taken away. Therefore there are other remedies which are just as effective as doing it in this particular fashion.
The question of there being no appeal is fundamental. Not a single member of this House can argue that there is a person who is infallible. Judges make mistakes, and with respect to you, Sir, chairmen make mistakes, because they are all human beings. That is why there are rights of appeal and why one does not take them away. As a lawyer, Sir, you also believe in the right of appeal. There can be no problem about a right to appeal when in the meantime the status quo is maintained and the creditors and the other people involved are protected. There is therefore no logic in taking that right away.
The issue of shareholders is one which troubles me greatly. A person who takes a share in a company has done so since company law has had this form, on the basis that there is a limited liability. The concept that one can be shareholder in a company and as a result of that can end up being insolvent and lose all one’s assets, is a very strange one. The hon the Minister of Justice sits next to the hon the Minister of Trade and Industry. I can forgive the hon the Minister of Trade and Industry for trying to do this, but can I forgive the Minister of Justice for not putting him right? I cannot.
He is going to reply to you adequately.
To my mind it is a most remarkable situation, namely that one can have a concept like limited liability and that a person can end up being ruined by taking a share in a company. One then has to be careful what one gets involved in. When one buys a share in a company, one does not know what kind of schemes they may get involved in in the future. How does one get rid of one’s share once one has it? I would like the hon the Minister of Justice to tell me how he, after he has brought a share in a company which subsequently becomes involved in a revolving scheme, gets rid of that share if nobody wants to buy it from him. It is not possible to do so. One owns it and one cannot make it a res derelicta because one’s name appears in the share register. How does one deal with it? With great respect, this concept, to my mind, is something which is quite wrong.
Then there is the problem of the application of the Companies Act and the Close Corporations Act. In due course I will go into that in some detail. By not saying in this particular measure that the provision should apply to a company as if it were unable to pay its debts, one is actually allowing the directors and other people concerned to get away with a number of things because some of the provisions of the Close Corporations Act and of the Companies Act only apply to a company unable to pay its debts, and not to a company which is placed in liquidation by the Minister in terms of this legislation. One can, for example, have no inquiry in terms of certain provisions which I will quote to the House just now, and a whole series of other things which apply only to a company unable to pay its debts. I would ask the hon the Minister, whatever he does, to see to it that we go into Committee of the whole House in order to deal with that issue because it is a fundamental one. One is then going to be worse off than if one had placed the company in liquidation because of its inability to pay its debts.
I do not know whether the hon member for Vasco considered this. It is in the memorandum he has in his possession. I do not think it is in the portion he read out. To my mind that is where he went wrong, namely by keeping that document almost totally to himself.
How did you get it if I suppressed it?
I am quite happy to tell the hon member that it was given to me quite openly by people who came to me in desperation to say that nobody could convince the hon member for Vasco and that perhaps other people should be told what was in the memorandum. I make no secret of it. I am not ashamed of it.
You got it from the committee member in your party.
No, I did not get it from him. He did not have it. I only got it after the committee closed its proceedings. They followed the correct channels and went to the right person who turned out to be the wrong person. I will go into this in some detail a little later.
I want now to deal with the question of the liquidators’ fees. It upsets me tremendously, if we are going to have changes, that we do not immediately deal with the question of the liquidators’ fees which are going to be enormous. That money, when it goes to the liquidators …
What is your solution? That is a very valid point.
I want to move an amendment on it. I have an amendment which I want to move, and I hope that the hon the Minister will support me on it. I also have another amendment on which I hope he will support me, and that concerns the question of proof of claims.
That is not in this Bill. Perhaps it is in another Bill.
No, no, I want to deal with it in this one! According to what I am told, there are over 100 000 creditors. [Interjections.] How many?
It depends on how one understands “creditors.”
Well, the hon the Minister used the figure 100 000. I am taking his figure, and I think he must accept that I am entitled to take his figure until he tells me that I am wrong in doing so. [Interjections.] I may be stupid to believe him, but I am believing him at the moment. I want to say to the hon the Minister and specifically to the hon the Minister of Justice that one of the major problems of these companies with these vast numbers of creditors is that many of them do not have the skill and all the rest of it in order to prove a claim. They have to go to further expense in order to prove a claim. Many of them are overlooked. I can give examples of where it has happened before. So, when we have 100 000 creditors, the cost of going through a procedure of having to prove who are the creditors in the form in which it has to be done at the present moment, is astronomical. It is a lawyers’ paradise. I think some of the hon members there would love to have the job of preparing all those claims, just as other people would like to have the job of being the liquidators. This needs attention, and it needs urgent attention where this kind of situation arises.
This particular company has other problems. It has problems in regard to GST. I am sorry that the hon the Minister of Finance is not here. It has problems in regard to income tax, very real problems. Various issues will have to be decided on. Who gets the money? Was there a profit in the company? Does the profit go to the State as tax? What happens to the GST? As I understand it, some of the GST has been paid. These are issues which we cannot just rush into. My difficulty is that, in fairness to the hon member for Vasco—and I do not know about everything that happened in his committee, so he can correct me if I am wrong—I do not think they dealt with all these issues in the committee. This is part of the dilemma in which we find ourselves.
I can go on and give some other examples.
Let us assume for a moment that this goes through and we have a liquidation. First of all there is a provisional liquidation order which could be confirmed—and with respect to the hon member for Stellenbosch, he should know that with a provisional liquidation the assets rest, provisional trustees are appointed and all these things take place. We all know that. If that takes place by reason of the fact that the company was liquidated because of an inability to pay creditors, the liquidation then brings all the sections into operation which deal with a company unable to pay its debts. Those include the powers to look at the books; they include the powers to carry out certain investigations; and they include certain powers given to the liquidator. I want to refer the hon the Minister—and I hope he will look it up before he replies—to, for instance, section 360 of the Companies Act which does not apply to a company which has not been liquidated on the grounds of inability to pay debts. Section 360 does not apply, section 366 does not apply, section 369 does not apply, section 384 does not apply, subsection (3) of section 386 does not apply, and section 387 does not apply. Then, when saying that the Companies Act applies, we have the question whether it is a compulsory liquidation that is deemed to be included, or a voluntary liquidation. I ask the hon the Minister of Justice to indicate how he reads it. A very simple and broad statement is made in relation to this. The proposed new Section 15A(2)(b) contained in clause 3 of the Bill says the following:
It does not say “particular” provisions—
Now, Sir, is it the provisions in all which must be the reason? Therefore, is it a voluntary or a compulsory liquidation? There are some six different grounds for a compulsory liquidation. What applies? Sir, this is a lawyer’s paradise. I do not know why the Bar and the Side Bar opposed it, because they are going to make a fortune out of it. It is a lawyer’s paradise.
Let me refer to the Close Corporations Act.
What about the status quo at the moment?
The status quo is that the company is in provisional liquidation. If we want to deal with that, we should apply a measure which gives the Minister the locus standi to apply for liquidation. Let us then include a revolving scheme if the measure is applied by a company as grounds for liquidation. Let us also say that the same provisions apply as apply to a compulsory liquidation on the grounds of inability to pay debt. If that is done, we will be getting somewhere. We will then be able to deal with the problem and we will be able to deal with all those gangsters and crooks, the matter about which the hon member for Umbilo is so worried. With the approach proposed at present, we will achieve the very opposite.
Let me deal with the Close Corporations Act. It includes provisions of the Companies Act but it also contains a particular provision, section 81, which deals with certain aspects and says it applies to a close corporation only where the liquidation takes place on the grounds of inability to pay debts. May I ask in all seriousness: Is it reasonable that a creditor of a company placed under liquidation should be deprived of his right to examine the directors to see what offences they have committed?
I agree with you.
The hon the Minister of Justice agrees with me. Then I want him to persuade the hon the Minister of Trade and Industry to see that that amendment is effected. It can still be done because we can go into Committee in the House.
If you have a point, I will advise him accordingly.
I am very happy to hear that.
I want to make an appeal—and I think the voice of reason is coming into this debate: Can we not agree that what we will do is to refer this Bill to the Committee of the House and in the meantime let the people concerned with it sit down and try to bring into being a measure the effect of which will be that the criminals do not get away with it, that the rule of law will not be abrogated, that we do not ignore the fundamental principle that one does not impose liabilities on people on whom one does not want to impose them, and that we co-operate in a true sense in order to bring this whole disaster to an end? Let us make no mistake about it: I accept without any doubt that, whatever the hon the Minister may have done wrong in the past by not acting timeously—those are different points—the reality is that we have to deal with the matter now in some form. We have to deal with it in a way that will be palatable to the public and that will also be effective. The way we are dealing with it at the moment is neither effective nor palatable to the public. All it is doing is creating a lawyers’ paradise of dispute and abrogating principles which are close to our hearts and which are close to the heart of every lawyer in this House and outside it. This is really the fundamental plea I want to make. I cannot accept the situation where Mr X, a creditor of such a company, cannot have the directors questioned to see whether they have committed offences. I cannot accept that existing rights, where a company shows an inability to pay, should be done away with. On the other hand I cannot accept the situation where we suddenly have a law in which the principles which to us have been fundamental are thrown out of the window. Those principles are real and they mean something in South Africa. They do not only mean something in South Africa, but they also mean something for South Africa, because then we can argue a case for South Africa, we can say that there is an audi alteram partem rule in many cases and that, where it is taken away, we fight in order to preserve it.
It is not being taken away. You have not studied the Bill.
I have studied the Bill from end to end. The fact that the Trade Practices Advisory Committee is entitled to have an advertisement published and that one can make written representations is not to me the audi alteram partem rule, far from it. That is why I make the appeal for legislation which is effective and which deals with the people who take advantage of other people who are perhaps unsophisticated in some cases, a little greedy in other cases and also of those people who do not quite understand what is going on. They need to be protected. Let us, then, see to it that in this case the people who are the evil geniuses do not get away with the money. They must not be allowed to get away with the money, not in any form whatsoever, whether this be in respect of the assets or in respect of the crimes that they may or may not have committed. That is what we actually want to do.
That is why I make this appeal to the hon the Minister. We will co-operate; we will help. However, we ask that, even at this stage, this Bill be not proceeded with in this form. If it is proceeded with, he will actually not achieve the object he wants to achieve; on the contrary, he will be doing harm to the principles of the judicial system, principles that are held dear by so many of us in this country. [Interjections.]
Mr Chairman, I would like to respond to one or two issues that have been raised regarding the events that took place in the standing committee. Since he was not there, the hon member for Yeoville could obviously not reply to them.
First of all, as the hon member for Vasco, who is the chairman of our committee, said, it was unanimously agreed that something should be done about these revolving schemes. As the chairman also mentioned, at the first meeting where the informal discussion took place, it was first of all agreed that we should define what is meant by a scheme. Secondly, we discussed the question of whether or not these schemes could be made illegal. The law advisers were asked to investigate this. The question was then discussed and put to the law advisers that the Minister should be given the loci standi to declare such a scheme illegal and then to apply for the liquidation of the company in question. We in the PFP also agreed— although we had reservations—that such an Act be given retrospective effect. If the hon member for Vasco is fair, he will concede that at no point did we discuss or agree to the question of there being no right of appeal.
The meeting of the committee then ended and we left believing that most of our objections would be met. The Committee then met again a week later. That was the first occasion on which we had sight of the new Bill, and also the first occasion on which we saw what the different amendments were. I think the hon member for Vasco would again agree with me that most of our original objections were met, and I thank him for that. He did try to bring about consensus.
The single fundamental issue on which our objections were not met, however, was the question of taking away the right of appeal. As soon as it became apparent that the committee was going to pass the Bill in such a form, the hon member for Walmer asked that we be allowed to get evidence from the Bar Council and the law societies. Therefore, the argument the hon member for Vasco raised that we should have asked for this evidence earlier on is not really valid because it was only at the point when it became apparent that the Bill was going to be passed with these amendments that we PFP members on the committee asked for evidence to be submitted.
I should like to quote, also, from the Notes for Chairmen of Standing Committees regarding our request for evidence, because the chairman of our committee said at that stage that he would put to the committee the question whether or not the committee should take evidence. I put it to him, however, that this is not the way in which a chairman should handle such a matter. I quote from the second paragraph on page 9 of the Notes for Chairmen of Standing Committees:
A further issue regarding the memo from the Bar Council is that we at no stage saw that memo while the committee was sitting. We at no stage were aware of such a memo until the hon member for Walmer in fact asked that we should get written evidence from the Bar Council. Then the hon member for Vasco quoted sections of that memorandum.
Another issue which, I believe, is relevant here, is that the whole time while this committee was sitting, the chairman must have been aware that the Trade Practices Advisory Committee was, investigating the very issue that we were discussing. At no stage was it even suggested that its report could perhaps be speeded up, which obviously it could have been as it has been made available now. Furthermore, at no stage was it suggested that it might help the committee in its deliberations if we could see this report.
I should really like strongly to support the appeal made by the hon member for Yeoville that the Bill be referred to Committee of the Whole House because there are a number of amendments we wish to move at that stage. In this way we could achieve the objectives that we desire to achieve without running roughshod over so many legal principles.
Mr Chairman, this afternoon we have been listening to a debate in which various members attempted simultaneously to blow hot and cold. On the one hand hon members of both the Official Opposition and the CP pleaded for action. They represented themselves as people demanding action in the interests of the consumer and the broad public against those who had misled the public. On the other hand those same members are not prepared to support the necessary action.
I believe we are all in agreement that a problem has arisen here—regardless of how it came about—of people obviously being misled in an abominable manner. Even though it was in ignorance and even though to a degree it was attributable to a speculative spirit which caused people to put money into these milk cultures, there is no doubt that thousands of people were taken in on a large scale, that they were obviously deceived and at the moment are faced with the problem that their money is not at their disposal. They have therefore suffered a great loss.
This afternoon I wish to make a plea in the interests of the public. Do hon members realize that in the case of Kubus Kwekery alone funds to the credit of that company in the bank yield R31 000 interest a day? Various people participated in the milk culture scheme in an irresponsible fashion. That one can say with justification. They were tempted and deluded into using their savings to buy the cultures and students even spent their bursaries on them. In fact, one can point a finger at many people today and say: You should have known better; you should have thought twice about this. In an access of emotion surrounding this case, however, people were deceived in the expectation that it was a scheme in which their money would yield great profits. I agree wholeheartedly with the hon member for Stellenbosch that it is a regrettable development. It is not a pleasant chapter in the history of our public life and it is necessary for us now to bring these people to book and clean up this den of iniquity.
The hon member for Umbilo referred to this legislation as merely a transitional measure. We now require instruments to empower us to act immediately. Which is why I am grateful that the hon member for Yeoville, who first changed his stand a little, eventually indicated that he accepted that action had to be made possible.
I appealed to you but you did not listen.
I am getting to the “appeal”. The hon member accepts that action has to be taken and he cannot get away from that. In fact, he says action should be taken or have I misunderstood him? [Interjections.] Action has to be taken but he differs on this point. He says: Let us wind the affairs of these people up but the manner in which the winding up has to take place will create endless problems. He wishes to make specific proposals in this respect and I am totally receptive to them. If the hon member submits his proposals within the next day or two, I shall consider them because a decision does not have to be taken immediately. I shall then consider that the House go into committee to examine those proposals. What is required, however, and the purpose in introducing this legislation is to terminate this endless process of lawsuits as a problem is obviously being experienced. I do not wish to mince matters; the process has to be brought to a head so that the people involved may be questioned.
The hon member for Yeoville referred to the report which has been released and I wish to deal with that. In the first case I wish to say that this report was released by the Registrar of Companies in terms of the provisions of the Act. It was not tabled by the Minister. The Registrar of Companies made it as widely available as possible, including to the Press. I wish to apologize to the hon member as I am aware that negligence occurred. It should at least have been issued to the mouthpieces of the various parties as well. I offer my apologies for that and we shall attend to the matter. It was not intended to be tabled in Parliament, however, and there was no intention of leaving members of Parliament in the dark.
It is disquieting to note that this report indicates that Mr Nieuwoudt drew some millions of rand from Kubus Kwekery. I believe it necessary that certain questions regarding that money be put to him now in the interests of people who became involved in these schemes.
Mr Chairman, I accept the point made by the hon the Minister that Mr Nieuwoudt be put certain questions but is it not so that in the Bill he now wishes to introduce there are clauses, and I can quote them again, which are not applicable? Can he therefore not be questioned in terms of those sections of the Companies Act?
Mr Chairman, I am prepared to attend to this case. The hon member has pointed out problems in this respect and I shall examine his proposals as far as they will facilitate action. The appointed inspector or liquidator may act in terms of the existing Companies Act and the Insolvency Act. If there are exceptional circumstances for which provision should be made even in the Companies Act, the hon member should put forward the proposals and we can examine them.
This is a unique situation. My intention in referring to and quoting Acting Justice Marais yesterday was not that he is now indicating that present legislation is inadequate. I realize Acting Justice Marais was referring to the post winding-up process and attendant problems. I quoted Justice Marais merely to point out that he had said repeatedly in his judgement that this was a unique problem. We have to do with a unique situation here. It is unprecedented and existing legal processes are not directed at dealing effectively with such an undesirable trade practice. Not even the legislation on trade practices aimed at serving the interests of the consumer and the broad public can deal with this.
Now hon members say that the Minister should have taken steps long ago. Sir, the Minister could act only in terms of legislation. The Minister cannot merely act as he pleases. His powers and authority are laid down by legislation of this House. The Trade Practices Act, and the hon member for Yeoville should also note this, merely provides that if the Trade Practices Advisory Committee regards a specific practice as undesirable, it may make such a recommendation to the Minister. The Minister may then, upon fulfilling all requirements as set out in the Act, prohibit that practice. The Trade Practices Act does not stipulate what subsequently has to become of the assets of that practice or the company concerned. There is therefore an obvious void in the Act which should be properly bridged in some way or other. I do not aver that this legislation offers the means of doing this. I regard this legislation as an essential interim measure to enable the Government to clean out this den. We should do it in a way in which we are not again paralysed by endless lawsuits. That is the reason for the drastic measure that no appeal can be permitted after the Minister’s decision. I shall deal with that matter very rapidly. In the first instance the Minister can act only on the advice of the Trade Practices Advisory Committee to which the hon member for Umbilo referred. The people serving on that committee are not only sensible persons who will pay thorough attention to such a drastic recommendation to the Minister. I should just like to draw the attention of this House to the fact that during the Trade Practices Advisory Committee’s previous investigation into Kubus Kwekery, Mr Niewoudt was represented by two advocates. This company therefore had the opportunity of putting its case very thoroughly. In the same way, with due cognizance of all points of view, the Trade Practices Advisory Committee can investigate a case thoroughly and advise the Minister accordingly. If the Trade Practices Advisory Committee should feel, however, that it should recommend to the Minister that a specific practice is a revolving scheme and should therefore be prohibited as an undesirable practice and the Minister should issue such a notice, as provided under the Act, there is no possibility of appeal. Yet there is always the opportunity of insisting that the Minister review his decision. The administrative right does not lapse in consequence. The hon the Minister of Justice gave me a book which puts it very clearly. The title of the book is The Law of South Africa, No 1 and I quote from pages 89 to 90, paragraph 90, under the caption Statutory Exclusions of the Court’s Review Jurisdiction:
Mr Chairman, may I ask the hon the Minister a question?
I think the hon member must put that question to the hon the Minister of Justice at an appropriate opportunity. [Interjections.]
Is the hon the Minister prepared to take a question?
I am in the hands of very expensive lawyers and I do not want to waste their time with private matters. [Interjections.]
You have to prove mala fides on your part if you are going to have any review at all. [Interjections.]
It is no use bandying a number of legal arguments with each other on this legislation. We identified a problem. The necessity for action to remove this problem was indicated. I went further, however, because I accept it is drastic legislation and that there are strong feelings in legal circles about it. Let me state it clearly: If I say there are strong feelings on this legislation, it is not merely that standpoints are being adopted against it. The hon member spoke about a report. I have a report here from senior advocates of the Cape Bar arguing for still more drastic legislation.
That cannot be so. I have the memorandum with me.
No, that is not the same memorandum. I have that one as well. I have received various memoranda. I have received various letters.
Not from the Bar Council.
The Cape Bar Council simply argues that such far-reaching powers should not be given to the Minister. For the sake of completion I should briefly like to illustrate the two objections of the Bar Council. I quote:
That is the first point of their objection. I quote further:
†This is nothing new, Sir. It does not, however, solve the problem.
Who are the other people?
The other people? I can tell the hon member who they are.
*Mr Chairman, my time is limited. I wish to emphasize again that we are dealing with an exceptional situation here for which legislation is essential at this stage. I went out of my way to give the committee an undertaking—and I repeat it here—that as soon as the discussion of this legislation has been completed, I shall refer the measure to the standing committee again. Under the leadership of its capable chairman the committee can collect the necessary evidence and give each witness the opportunity of putting his case to enable us to amend legislation as regards trade practices in such a way that in future swift and effective action may be taken in cases of this nature.
As my time has already almost expired, I wish in closing to thank hon members for their support of this measure. I regret we became bogged down in a number of unnecessary arguments. Nevertheless I do not doubt that every right-minded member of this House regards swift and effective action in this connection as essential now.
Mr Chairman, may I put a question to the hon the Minister?
Unfortunately not. The hon the Minister has already resumed his seat.
Mr Chairman, on a point of order: You cannot—and I say it with great respect—see everybody in the House. The hon member for Pietermaritzburg South had, however, already risen when the hon the Minister resumed his seat.
Order! The hon the Chief Whip of the Official Opposition is a very senior hon member of this House. I will give him the benefit of the doubt. Is the hon the Minister prepared to take a question?
Unfortunately, Sir, time does not allow me to reply to any questions now. [Interjections.]
Order! That then solves the situation which has arisen.
Question put: That all the words after “That” stand part of the Question,
Upon which the House divided:
Ayes—94: Aronson, T; Badenhorst, P J; Ballot, G C; Bartlett, G S; Botha, C J v R; Botha, J C G; Botma, M C; Breytenbach, W N; Coetsee, H J; Coetzer, H S; Conradie, F D; Cronjé, P; Cunningham, J H; Cuyler, W J; De Beer, S J; De Jager, A M v A; De Pontes, P; Du Plessis, G C; Durr, K D S; Du Toit, J P; Fick, L H; Geldenhuys, A; Geldenhuys, B L; Golden, S G A; Grobler, J P; Hardingham, R W; Hayward, S A S; Heyns, J H; Jordaan, A L; Kleynhans, J W; Kriel, H J; Landman, W J; Lemmer, W A; Le Roux, D E T; Ligthelm, N W; Louw, E v d M; Malherbe, G J; Marais, P G; Maré, P L; Meiring, J W H; Miller, R B; Morrison, G de V; Munnik, L A P A; Nothnagel, A E; Olivier, P J S; Page, B W B; Poggenpoel, D J; Pretorius, N J; Pretorius, P H; Rabie, J; Raw, W V; Rencken, C R E; Rogers, P R C; Schoeman, H; Schoeman, S J; Schoeman, W J; Schutte, D P A; Simkin, C H W; Smit, H A; Streicher, D M; Swanepoel, K D; Terblanche, A J W P S; Terblanche, G P D; Thompson, A G; Ungerer, J H B; Van den Berg, J C; Van der Merwe, C J; Van der Merwe, C V; Van der Merwe, G J; Van der Walt, A T; Van Eeden, D S; Van Rensburg, H M J (Mossel Bay); Van Rensburg, H M J (Rosettenville); Van Staden, J W; Van Vuuren, L M J; Van Zyl, J G; Venter, A A; Venter, E H; Vermeulen, J A J; Viljoen, G v N; Vilonel, J J; Volker, V A; Watterson, D W; Weeber, A; Wentzel, J J G; Wessels, L; Wilkens, B H; Wright, A P.
Tellers: J P I Blanché, W T Kritzinger, C J Ligthelm, R P Meyer, J J Niemann and L van der Watt.
Noes—33: Andrew, K M; Bamford, B R; Barnard, S P; Burrows, R; Cronjé, P C; Dalling, D J; Gastrow, P H P; Goodall, B B; Langley, T; Le Roux, F J; Moorcroft, E K; Olivier, N J J; Savage, A; Schoeman, J C B; Scholtz, E M; Schwarz, H H; Sive, R; Snyman, W J; Soal, P G; Suzman, H; Swart, R A F; Tarr, M A; Theunissen, L M; Van der Merwe, J H; Van der Merwe, S S; Van der Merwe, W L; Van Heerden, R F; Van Rensburg, H E J; Van Staden, F A H; Van Zyl, J J B; Visagie, J H.
Tellers: A L Boraine and A B Widman.
Question affirmed and amendment dropped.
Bill read a second time.
Certified fair copy of Bill to be transmitted to the State President for his assent unless the House decides within three sitting days after the disposal thereof in all three Houses to refer the Bill to a committee.
Mr Chairman, I wish to claim the privilege of the half-hour.
I should like to start by thanking the hon the Minister for his reply to the Second Reading debate and for his efforts to deal with the various points raised by hon members. All his replies were not to our satisfaction, but he made the attempt to reply. He also raised certain issues with which I intend dealing because I think they need response. I should like to point out that the hon the Minister failed to grasp the real arguments …
Order! We cannot continue in this way; the noise in the Committee is too loud.
Thank you, Sir.
I feel that the hon the Minister has not grasped the arguments about the drafting of the Budget and the policies which it is designed to implement in practice. Although the hon the Minister said that he had read my speech very carefully over the weekend, I want to point out that it was a nice, lazy weekend with lovely days and perhaps he did not give my speech the full attention that it deserved.
I do not intend going into the policy aspects and the financing of the Budget as such while we are in Committee, because I prefer doing that in the third reading debate when we shall be in a position to review the actual approach to the whole subject matter. I think it is more appropriate for me to deal at this stage with certain aspects which lend themselves to debate in Committee because this is the opportunity for us to discuss them across the floor.
To begin with, I want to point out that the hon the Minister, when he referred to the case of Gwen Lister in South West Africa, tried to rule me out of court. I want here to quote from the unrevised copy of his speech yesterday in the course of which he said that I had entered into a long tirade about Lister in Namibia and that I did not seem to realize that the Post Office of South West Africa was autonomous and had nothing to do with him in his capacity as Minister of Communications. He went even further and said:
With great respect, I have some difficulty with this. If the hon Minister had read my speech carefully, he would have seen that I had said she had handed—I quote from my speech—an envelope to her lawyer. Printed across the top was an application in terms of section 118A of the Post Office Act, 1958, marked “Uiters geheim/Top Secret.”
I think we are all familiar with section 118A. It deals with the interception of postal articles etc by a functionary who in this case is the Minister, or else the Minister can delegate this function to an officer with the grading of Deputy Postmaster-General or higher.
Section 121A of the Post Office Act, 1958, refers to the application of the Act in South West Africa. This section reads:
We have had many arguments about the application of section 118A. I want to refer the hon Minister to certain remarks in this House by his predecessor, Mr Hennie Smit. I refer to Hansard: Assembly, 24 May 1982, col 7531. There the then Minister of Posts and Telecommunications spoke about the report of the Advocate-General, Mr Justice P J van der Walt. The then Minister quoted Mr Van der Walt on the recommendations that had been made. These were as follows:
I quote further from col 7532. This was as a result of the recommendations of the Rabie Commission:
My next quote is from col 7533:
It is true that the Post Office of South West Africa is autonomous and that it has its own Postmaster-General, but nowhere in this Act can I find a provision to the effect that the Minister can delegate the authority and powers vested in him to anybody in South West Africa, least of all the Administrator-General to whom he has referred.
The hon the Minister goes even further and says: “I am not interested in the case either.” With great respect, if I were the Minister I would be interested in the case, because the Minister of Communications is basically still the person responsible for the administration of the Act, including section 118A. Until this Post Office Act is changed in any way, the Minister may not shirk his responsibility.
Unless the hon the Minister can prove to me that he has delegated the powers vested in him to anybody in South West Africa, he remains the responsible Minister. The Minister referred to in this Act is the Minister of Communications. As far as I know there is no Minister of Posts and Telecommunications in South West Africa who fits in with this definition. With great respect, I do not think that the hon Minister can simply wash his hands of the entire affair in South West Africa.
The hon the Minister then tackled me on the question of the announcement of tariffs at short notice. With regard to this matter I want to quote from the hon the Minister’s his speech. He seems to be confused in regard to making an announcement in Parliament and making an announcement which is timeous in that it warns the people concerned. I quote from his speech in this House on Monday 11 March:
The hon Minister then said this would have meant a loss of between R30 million and R40 million.
With great respect, when the hon the Minister took over this post as Minister of Posts and Telecommunications he said the following—and I quote from Hansard, 15 March 1983, col 3059. The Minister said the following:
That is the only point I was making, namely that the notice given by the hon the Minister in announcing tariff increases in this House, only gave commerce and industry three weeks’ in which to prepare their budgets and that in fact, many of them had already done so. That was the point I made and the one I was hoping the hon the Minister would deal with. It is necessary for them to have advance notice. My suggestion could not have been so foolish, because the Minister did consider it. He actually said that he considered staggering the increases until May, but that that would have meant a loss of between R30 and R40 million, and that was why he did not do it. He therefore wanted to do what I suggested to him but he did not do it for a different reason.
Incidentally, while I am on the subject, I want to say that warning the public each year in the Post Office debate that there are going to be increases the following year, is becoming a habit of the hon the Minister. He considers that to be a licence and authority for him to do so each and every year. We appeal to the hon the Minister to stop this kind of warning of increases because he only uses it as an excuse to raise tariffs.
The hon the Minister also referred to the point I made about inflation. I said that the increases would contribute towards increasing the inflation rate to 18% and not to 14%. In this respect I also referred to increases in power, petrol and various administered prices. The hon the Minister likes putting up skittles and knocking them down, but I just want to point out these facts to him.
The hon the Minister dealt with the deficit to which I also referred. He said that I had said that they did deficit budgeting and that if they were to go overseas to borrow money in such circumstances they would look absolute fools, because they had in their own hands all that was necessary to control the situation. I then told the hon the Minister that they budgeted for a deficit last year. He asked how he could go overseas with a balance sheet that showed a deficit, because nobody would be prepared to give him credit. However, the revised estimates show that the hon the Minister in actual fact borrowed R500 million overseas in spite of the deficit budget.
Not a deficit on the balance sheet.
Yes, but he still budgeted for a deficit. He sought a loan of R673 million, but he probably borrowed about R500 million, and now again he is looking for R560 million. With great respect, I do not think the hon the Minister’s argument holds water.
I want now to turn to a matter raised by the hon member for Johannesburg North, namely that of Post Office officials being given certain free telephone services. The hon the Minister said that he would deal with the matter on Monday, but Monday came and he did not deal with it at all. Let us put this in its proper perspective. The hon member asked what the financial implications were of the use by officials of free telephone services. We are dealing here with 19 343 individuals who receive these services. They receive the following: Free installation which costs R75. If one multiplies this by 19 343, one gets R1 450 725. The Post Office has done this and these people can have it with the greatest of pleasure. These people do not have to pay rental for those telephones, which is R9 per month or R108 per year. If one multiplies that by 19 343, one gets a figure of R2 059 044. That is the amount with which the Post Office is subsidizing them in respect of rentals. Then they get the units free, from 50 to 300. Let us take an average of, say, 150 units, which I think is fair. The cost of 150 units at 10c per unit comes to R15 per month. With the total number of units used it comes to R290 145 per month or R3 481 740 per year. So we are now dealing with something like R5,4 million.
I am the last person to criticize the staff or officials of the Post Office. I think they have done a fantastic job and deserve praise. However, we are living in hard times and all the other officials are being asked to make sacrifices. When the State President asked for sacrifices to be made, the Post Office was only concerned with a portion of the 13th cheque. It was not concerned with other matters such as the abolition on average of 50% of the posts, although some of them will not be filled. It was not concerned with expenditure on the present achievement awards which provide for a maximum of 25%. It was not concerned stipulating that those who make regular use of transport should pay for their own.
Would it not be reasonable in these times of sacrifice, with the economy in its present state, to say to the Post Office employees who are enjoying this perk that they can use their telephones in the interests of the Post Office and their business but that in respect of their private calls they must make voluntary contributions, pay their rentals and pay for the units spent on private calls? That could be done just for this year. After all, other people are having to make sacrifices. What is more, they are still going to get their promotion. The gradings are still there. One must also consider the fact that the R705 million provided for actual staff payments includes the R86 million for the 12% increases they got. The 12% increase stays. Would it then in these times be such a hardship for them to make this sacrifice? I therefore support the hon member for Johannesburg North’s appeal at this particular time. I think that that is quite reasonable.
I am afraid that that is all I have time for at this stage. Perhaps I can go a bit further at some later stage.
Mr Chairman, the hon member who has just resumed his seat sounds to me like someone who has fallen into an empty grave over there in South West Africa and cannot get out. I prefer to leave him there. I am not going to react to what he said.
In the old days the mail was delivered on foot, later on horseback and even later by horse-drawn carriage or mail coach. Where I grew up, on the banks of the Krom River, halfway between Bedford and Cradock, just this side of Daggaboersnek, there was a kind of halfway house or halfway station in the old days where fresh horses for the mail coach were kept. There was also a small hotel, and whilst the mail coach waited for a change of horses, the passengers could have a quick spot. The coach horses always had gleaming coats, and a little dagga in the fodder gave them that extra bit of a sheen. The grooms, who did not always feed all the dagga to the horses, were so dagga-fit in those days that they would, if need be, have been able to trot with the horses for the entire distance.
It is also said that each Monday a nearby farmer would send his Bushman to the hotel with a fat hamel tied to a rope in the one hand and an empty demijohn in the other and that when the Bushman turned back it was without the hamel but with the demijohn full of brandy. I know that the hamels in that part of the world grow to be very large; I do not know how large the demijohn was, so to be able to compare prices in those days.
In any event, the mail arrived by horse-drawn coach. Subsequently trains ousted the mail coach and people in the vicinity had to fetch their mail from the station. The station lay at the point where the railway line, emerging from the poort, snaked between the brown ironstone koppies and aloe-ridges up to the level ground of the flats along the banks of the Great Fish River, the lonely old station with the long history and the very lovely and descriptive name of Dassiedeur Station—because even a dassie found it very difficult to get through there. As a child that is where I went to fetch the mail. By the way, that was where my grandmother had to go to catch the train, a distance of 15 km on foot, with six small children, some of them piggybacked, others held in her arms and others holding on to her hand, to visit my grandfather in jail in Cradock during the Anglo-Boer War. The horses and the transport animals had been confiscated. I am merely pointing that out to indicate that we are not the only ones having a hard time of it, because even in those days people were also having a hard time. In the course of time, however, Dassiedeur Station also had to bow to progress and the station was closed. The mail now goes to Mortimer or Cradock, because it is difficult for trains or aircraft to make stops at all these small places. In 1985 the Post Office, like many other institutions in this country, came full circle. One can say that the mail coach was again introduced. In an effort to get postal articles to their destinations more quickly, and in an effort to eliminate duplication in the handling of postal articles, a campaign was launched to dispatch consignments between post offices by land and air as far as possible. Since 1 April 1981 1 346 additional dispatches by land and 405 additional airmail dispatches have been introduced. As a result of an increase in the number of mail bags that have had to be transported over the years, the cancellation of numerous train services and a lack of adequate space in brakevans, increasing problems have been experienced with the transport of mail bags in certain areas.
In addition many mailbags overshoot their destinations. There are many reasons for this, but an alarming number of bags is involved. A solution to this problem, and to many other problems in the country, must simply be sought and found. In an attempt to counteract this problem in part, as of 5 July 1982 the Department introduced its own road transport service between Pretoria and Johannesburg. It is almost like the mail coach of old. Commencing on 11 October 1982 a similar service was introduced between Germiston and Johannesburg, and since 1 August 1983 between Durban and Pietermaritzburg. The success achieved with this gave rise to the idea of introducing a network of road transport services in the PWV area and establishing a mailbag exchange office at Comet, near Boksburg, where there can be an exchange of mail dispatches between control offices. This unique step became a reality during February 1984. The road transport service is expected to pay for itself as a consequence of the saving on the SATS’s transport account. I just want to mention that 7 500 postal articles are handled daily at this office at Comet.
Not only must mailbags reach the various post offices, but there must also be home deliveries of individual postal articles by postmen. Not only are postmen or postwomen exposed to the dangers of lonely people opening their doors to them and possibly inviting them in, but they also have to brave dangerous dogs in order to get to those front doors. The dogs are either over-friendly, as a result of a shortage of trees in the vicinity, or they simply bite anyone in sight because they are ferocious or merely frustrated. In 1984 there were 277 reported attacks on postmen by dogs. A Prog objected the other day to the financing of uniforms for postmen. He alleged that some people would not take to uniforms. I would really like to see a Prog delivering mail, to a house where there is one of these nip-and-taste types of dogs, bare-legged in shorts and wearing a pair of tackies with which to chase the dogs when they start biting. The Post Office does not throw its postmen to the wolves, as the Progs would like us to.
To the dogs.
To the wolves. They only know about wolves. The Post Office looks after the welfare of its people. In the cases of medical costs having been incurred as a result of attacks by dogs, these are fully covered by the State, and where possible these costs are recovered from the owners. All absenteeism related to such incidents is treated by the Post Office as special leave with full pay.
At the outset, Mr Chairman, I should first like to tell the hon the Minister that I am very grateful for his written reply to the questions we put last year. What he could not deal with at the time, his department dealt with. We thank him very sincerely; it is also appreciated. [Interjections.]
This department, we can truly say, is a tremendously important one in modern-day life. Posts and Telecommunications—including, of course, telephone and telex services—are not only of importance to commerce, trade and industry; they are also, as it were, indispensable to all organizations. We certainly cannot imagine what things would be like if these services were not available to everyone in modern-day life where such high-speed presentation is necessary.
It is not, however, only organizations and all these various institutions that so urgently need all these services, but also individuals. Their needs, it is true, are more restricted, not so wide-ranging, but they are nevertheless also of great importance to them.
I should now like to mention the fact that there is one group of people for whom I definitely want to take up the cudgels this afternoon. I am referring to our indigent and our aged. These people, particularly our aged, are so dependent on both the letters they receive and those they write. They are also—particularly the aged—very dependent on the telephone. They like to receive calls; at times it is their only avenue of communication with the world at large. So for them it is often an escape from that lonely life they sometimes have to lead, cloistered in their houses or in a room. That is why we find it such a tragedy that they have met with so many unexpected increases, so many unexpected shocks, from this department too. Their letters, telephone calls and telephone rental are more expensive. How must they manage with that small pension they receive? The rich do not feel it. For them R2 000 perhaps has the same value as R2 has for the aged. That is why I want to say that our hearts go out completely to these aged of ours who have been dealt so many blows recently. Everything has increased in price and is going to increase in price even further in the future. Even this tiny avenue—their avenue of contact—which has brought a little sunshine into their lives, is now being taxed so heavily that it will really no longer be easy for them to afford it.
I also want to say that people who are ill urgently need a telephone. Normally it is the handicapped and those who are ill, in the destitute portion of our society, who also have a hard time of it.
Another matter I should like to broach relates to the public telephones along the Natal South Coast. [Interjections.] We have been holidaying there for the past 23 years now. I must tell the hon the Minister that in the past few years we have had no public telephone service. [Interjections.] The people holidaying there—a few thousand of them—have to rely on the telephone to ascertain whether things are still all right at home.
I also see, for example, when matriculation examination results come out, how difficult it is, in fact, for people to ascertain their results. They stand in long queues at the public telephones—merely to discover that those public telephones are broken or out of order. People also complain of having to drive fruitlessly from one place to another in search of a public telephone that works.
The hon the Minister will quite probably tell me that this inconvenience that one has to put up with when one is on holiday and wants things to be as convenient as possible, is the result of vandalism. In our opinion vandals are as synonomous with modern-day society as the stone-throwers are. Once again it is the taxpayers who have to help with the replacement of buildings that have been burnt down, telephones that have been broken and broken window-panes.
It is not, however, merely my intention to criticize this afternoon, for I should also like to make some suggestions. Why can public telephones not be installed in cafés or garages, because there there are, after all, constantly people who can keep an eye on them. In all probability no one would easily vandalize a public telephone on garage premises. That would also mean more business for these undertakings. In this respect it is therefore a question of one hand washing the other.
As a matter of interest I should also like to put a question in connection with the Post Office’s filatelic services. I notice that R56 000 has been voted for advertising this service. I find the stamp series very interesting, and I notice that four sets of commemorative stamps are issued annually. Since I became conscious of events there have been umpteen stamp series, but in the past few years we have undoubtedly had a very great variety. I should like to get a bit more information about this from the hon the Minister. What, for example, are the costs involved in the design of new stamps? There are so many new designs, amongst other things Government buildings, beaches, beach houses, bridges, locomotives and flowers. The commemorative stamps appearing annually, and also the new designs, are very lovely. I have no objection to them, but I should like to know what revenue the Post Office earns from this. Is it really a paying proposition for the Post Office to issue such a large variety of stamps?
The Postal Services are one of the departments about which we must be very meticulous, because the Postal Services are the channel by which people communicate with one another. These days it is very important for people not to live in isolation, but constantly to remain in touch with one another, in spite of the South Coast’s broken telephones.
Mr Chairman, the hon member for Germiston District must please excuse me if I do not react to her speech. I just very quickly want to broach a financial matter which is apposite to this debate.
This past weekend we saw articles in the weekend newspapers about the Post Office Budget, articles generally reflecting a favourable reaction. There was also an article, amongst others, in the Afrikaans Sunday newspaper under the headline “Postal Services puts R78 million aside”, and in that article a few statements were made which perhaps need some explanation.
The reporter, Deon Basson, referred to a practice that has taken hold, that of making provision for the increased replacement value of fixed assets, and then he says:
This creates the impression that the Post Office is making use of certain dodges to conceal revenue. As chairman of the Standing Committee on the Accounts of Posts and Telecommunications I think it is necessary for this matter to be explained very pointedly. The custom of making provision, not only for the depreciation in the historic cost of items, but also for their replacement, is not a haphazard or new custom used by the Post Office. In March 1972, thirteen years ago, the Franzsen Committee, in its recommendations about the need to finance 50% of the Post Office’s capital needs from the current surplus, also said amongst other things that provision should be made for depreciation, very clearly defining what the three components of depreciation should be. In its recommendation the committee states that depreciation should firstly consist in providing for the replacement of assets at historic cost; secondly, additional provision to cover the higher costs which would be applicable when the assets are actually replaced and, thirdly, provision for the possible early replacement of assets as a result of technological developments.
The Post Office makes use of the straight-line method of depreciation for the depreciation of its fixed assets by reducing the historic cost annually by a fixed percentage. I do not think there is time to give the House the complete list now, but we can just briefly mention that the smallest depreciation percentage is that relating to buildings and accommodation, amounting as it does to 2,5% and presupposing a lifespan of 40 years for buildings and accommodation. That varies, reducing to the shortest possible lifespan, namely that for motor vehicles, for which depreciation of 16,66% is an accepted figure, presupposing a lifespan of six years.
To implement the Franzsen Committee’s recommendation concerning these last two aspects of depreciation, ie additional provision for actual replacement, in other words making provision for inflation, and provision for the possible early replacement of assets, it was decided, in 1972, to employ 30% of the historic depreciation for these two joint aspects. Subsequently that percentage was revised, and since 1 April 1975 50% of the amount provided for depreciation on historic cost is being used for these two aspects.
The answer to the question about whether such provision is too liberal, as this report suggests, is perhaps best illustrated if one looks at the group of items under the head “Exchange Cables, Telephone Switching Equipment, Inter-exchange Lines, Transmission Equipment and Power Plant”, for which allowance is made for annual depreciation of 3%. This means that this group of items, which constitutes 77% of the total fixed assets of the Post Office, will have fully depreciated over a period of 33 years. With the advent of electronic exchanges it is now necessary to replace electro-magnetic exchanges, parts of which are 20 years, 10 years and even a mere five years old.
A very good example of the replacement that must take place earlier than is necessary, one finds under the heading “Telephone Subscribers’ Plant”, for which allowance is made for 5% depreciation. These assets, including manual switchboards for business undertakings, is allowed to depreciate fully at 5% per annum over a period of 20 years. Experience has taught us that clients are increasingly replacing switchboards that have been in use for 10 years or even less because of technological advances in this field. Subscribers prefer equipment that functions without operators. That is their reason for wanting the new equipment.
So, far from this provision for depreciation, replacement and early replacement of assets being excessive, the Post Office is, in fact, of the opinion that the depreciation is still inadequate. At present a thorough study is being made into the question of whether more adequate provision in this sphere is not perhaps necessary.
I ask the hon member for Umlazi to forgive me because I do not intend to deal with any of the points that he raised.
At the outset of my speech, I wish to reiterate very briefly the comments that were made by my colleague the hon member for Umhlanga when he expressed his best wishes to Mr Bester and congratulations to those officials who have recently been promoted.
If I may, I would like to single out one of those officials to whom I would like to extend particular welcome and congratulations, namely Mr Taylor. He was born and bred in a very fine area in Natal. They always say that ecological factors have a great bearing on a person’s final achievements. That happens to have been in my own district.
As the representative of a rural community, I do feel that it is essential that the rural point of view should be expressed in this debate. One is filled with envy and awe on reading the annual report and the references to sophisticated telecommunications systems that have been installed in many urban areas. Once again I wish to make it clear that I support the comments made by the hon member for Umhlanga that it is essential for the telecommunications system in South Africa to be kept up to date with the most modern technology available. The question that one asks oneself, is whether the degree of sophistication of these systems is all that necessary. However, I would not venture to involve myself in an argument as to the why’s and wherefore’s of this, beyond merely expressing this as a single thought. I wish to make it clear to the hon the Minister that I consider that rural areas generally have been neglected in regard to the updating of telephone systems. On the other hand, the public in the platteland also appreciates the need for improving postal facilities. Here I would like to express my appreciation to the hon the Minister for the attempts that his department has made to expedite the delivery of mail in many of the rural areas.
Several exchanges exist in my constituency that can only be described as archaic and inadequate to meet the needs of the communities they serve. In fact, they verge on the anachronistic if one looks at this in the modern context. Telephone operators in certain of these areas work under the most difficult conditions. They often have to endure the impatient growls of the public during peak hours and during holiday periods, all because of inadequate incoming and outgoing trunklines, as well as the overloading of farm partylines. We know that there is a new system that has been expanded in this country in regard to obtaining better performance on party lines, and we certainly look forward to its application in the more remote rural areas.
There are times when telephone operators become frustrated because of the outmoded equipment they have to use while demands from the public are increasing steadily. Telephone communication is a vital component in the infrastructural requirements of the rural areas. It is for this reason that people in the rural areas particularly regret the telephone tariff increases announced in the Post Office Budget.
I wish to return to the question of inadequate incoming and outgoing trunklines and the overloading of farm party fines. In this regard I wish to deal with specific areas in my constituency. I want to draw the attention of the hon the Minister to the fact that exchanges at Ixopo, Donnybrook, Creighton, Mooi River, Underberg and Himeville have to contend with the problem of insufficient trunklines, while Underberg and Himeville subscribers have also had to struggle in addition, with overloaded farmlines. It is as well to note that, as a result of this, many subscribers have opted to incur the additional expense of having private telephones installed on their farms.
The conversion of the Richmond exchange from manual to automatic is long overdue and it is pleasing to note that the necessary work is now under way. However, I call upon the hon the Minister to direct his attention to the automation of the exchanges at Ixopo, Donnybrook, Creighton, Underberg and Himeville. While appreciating the need to curtail capital expenditure, I must emphasize that the decision to delay the conversion of the Mooi River exchange, albeit for only a year, can hardly be justified in the fight of the increased requirements of that community. Considerable development has taken place in Mooi River over recent years but its telephonic communication system has not kept pace with its growth. Similarly, delays in the installation of telephones at Howick have been the cause of considerable complaint but I must say that I do appreciate the efforts of the hon the Minister in getting these installations expedited.
I note in the annual report that there are now some 900 manual exchanges in operation. One should not forget the important role that operators, of the exchanges that function on the “wind and grind” system, play in the smaller towns in the country areas.
I prefer “wined and dined”! [Interjections.]
No, we are not talking about after-hours service, Sir! I wish to pay tribute particularly to those long-serving operators who have become an integral part of the local communities they serve. Nothing is too much trouble for them and they go beyond the bounds of their duties to satisfy their subscribers.
In conclusion I wish to refer to the important role that the technical staff is playing in maintaining telephone services in the rural areas during the summer months when thunderstorm conditions prevail. These storms frequently cause disruptions and I want to appeal to the hon the Minister to ensure that adequate and, if necessary, additional staff be made available to cope with all contingencies at that time of the year. A specific case has been brought to the attention of the hon the Minister where a luxury hotel in my constituency suffered an estimated loss of about R30 000 as a result of problems experienced during inclement weather.
Finally, I want to refer to the problem that occurred at my own exchange when the code system was changed overnight and no indication was given that this had been done. I do feel that in cases of this nature adequate steps should be taken to inform those people who wish to contact the central exchange that there has been a code change.
Mr Chairman, the hon member for Mooi River must excuse me if I do not reply to him. I think the hon the Minister will give an adequate response to all the points he raised.
In his budget speech the hon the Minister said that in the present economic climate tariff increases were the minimum that could reasonably be required. Yet we hear words of tremendous indignation and criticism from the Opposition Parties about these moderate increases that have been announced.
It remains of importance to compare South Africa’s post and telecommunications tariffs with those of other countries, particularly those countries which are called our trading partners in the West. The hon member for Umlazi has already drawn a comparison between the postal rates for letters in South Africa and abroad. To place the matter in even clearer perspective, I thought it would be a good thing to compare South Africa’s rates for parcel post, which is conveyed by land, with similar rates abroad.
To send a 1 kg package by land costs R1,04 in South Africa, R1,78 in Switzerland, R3,39 in the Netherlands and R4,51 in West Germany.
When one has a look at telephone tariffs in other countries, interesting figures also come to light. Let me again furnish a few examples. It costs R75 to install a telephone in South Africa—that is the new tariff—R189 in Argentinia, R220 in Australia and R189,02 in the United Kingdom.
The monthly rental for a telephone in South Africa will be R9 from 1 April, having previously been R7. In Australia it is R14,06, in West Germany it is R16,21 and in the United Kingdom it is R12,73.
In South Africa a local telephone call costs 8 cents per unit. From 1 April it will cost 10 cents. It in Australia it is 22 cents, in West Germany 13,8 cents and in the United Kingdom 11,8 cents.
Lastly, to place these figures even more clearly in perspective, I want to refer to the cost of a 3-minute telephone call over a distance of 100 km. In South Africa it will be 60 cents from 1 April, having previously been 48 cents. In Argentinia it is R1,88, in Australia it is R1,47 and in the United Kingdom it is R1,42.
If we compare these tariffs in South Africa with those abroad, we can justifiably congratulate the hon the Minister and his department on their achievement in having kept tariffs so low. If one compares these tariffs with one another, one wonders how it is possible to furnish such a high-quality service at such reasonable tariffs in South Africa.
I want to make a request to the hon the Minister in connection with the possibility of establishing a toll-free telephone service. I am not aware of the use of such a system in Europe or the United Kingdom. It has, however, been in use in the USA for a long time now. The American toll-free system channels telephone calls from throughout the country to a predetermined point where a toll-free client has focussed his activities. The benefit of such a system is that the caller can put through a call to the toll-free client at the cost of only a single call unit, regardless of the distance of the caller from the toll-free client’s premises. The toll-free client pays a fixed tariff for every call he has received via the system. The tariff is calculated in accordance with the length of the call. This system has innumerable possibilities for facilitating business arrangements. It also acts as an incentive for the consumer to react more readily to advertisements in newspapers and magazines because he knows he can put through a toll-free call to a business undertaking linked to this system. I should like to know from the hon the Minister whether—and if so, when—such a system could be put into operation here in South Africa.
I should like to tell the hon the Minister that I very readily understand the fact that there has now been a deceleration in the automation of manual exchanges in rural areas. I do, however, want to ask him not to decelerate the construction of the telephone exchange at Marble Hall. I also want to ask the hon the Minister to let us stick to the planning involving Naboomspruit. Those are two growing communities, and I hope we shall be able to give them their automatic exchanges.
Mr Chairman, I just want to say that I agree fully with the hon member for Potgietersrus when he makes an appeal for toll-free telephones. They are widely used in the USA. If one wants to hire a motorcar, one can ring up from any place. One’s request goes through to the central office which has a computer on which one’s name is recorded, and one can there hire a car at any place. There are large numbers of businesses which operate toll-free.
Arising out of that, there is another problem which we have in South Africa, and that is the question of overseas calls. At R4 a minute it is becoming rather expensive. I know because I put two overseas calls through this morning and each of them cost me R12 for a very, very short conversation. I think that is too high. However, I want to say that the time has come for us to do the same as the USA, where they already have toll-free telephones as well as time differentiated overseas calls. One can make these calls from anywhere in the USA. It is what the time is in South Africa that is important. Local calls are cheaper during the times that the Post Office is not busy and there is no reason why we should not introduce this system for overseas calls. There can be different tariffs. The standard time can be from 6 o’clock in the morning till 8 o’clock in the evening, and from 8 o’clock in the evening till midnight we can have a lower charge. The lowest charge can be from midnight till 6 o’clock in the morning. The lowest tariff can also apply from 1 o’clock Saturday afternoon till 6 o’clock Monday morning. This will give families an opportunity to be in contact with their children or their relatives in other parts of the world at a lower tariff. I would highly recommend to the hon the Minister that he adopt that system.
I should like to deal briefly with the accounts of the Post Office. I want to express my appreciation to the hon the Minister of Communications for agreeing to provide an addendum to the annual report and updating it to December of the previous year. In these days of rapid change the annual report is almost a year out of date by the time we deal with it. As a legislator, I find the published estimates of revenue and expenditure somewhat difficult to follow. The accounts show the revised estimates only for the previous year, in this case 1984-85 as well as the estimates for 1985-86. They do not, unfortunately, go back so that one can get a view of what is actually happening over, say, a five-year period.
No, but you can get it out of the library.
Yes, but I am a legislator, not an accountant.
I would like to recommend, in addition, that the hon the Minister establishes an accounts research division in his department. It is common practice in large companies with turnovers of the magnitude of that of the Post Office to update and change their accounting systems continually. Just as the Post Office tries to have the most modern and up to date telecommunication system in the world, so it should strive to have the most up-to-date accounting system which would provide it with not only profit accounting, but also management accounting. I believe, furthermore, that it might be in the interest of the Post Office to utilize the services of some of our esteemed professors of accounting at our various business schools. They are well versed in these modern procedures. Let me cite an example—this was discussed in the standing committee—from the Estimates of Revenue submitted in terms of section 12F(7) of the Post Office Act. This concerns internal charges. For instance, it is said that in respect of the Savings Services these internal charges amounted to R167 million out of a revenue of R235 million. In other words, 70% of the internal charges were against Savings Services. That is absolutely absurd. It cannot happen. We see that in respect of the Telephone Services, the services which generate the most revenue, the revenue is R2 382 million while the internal charges amount to R6,2 million, less than 0,25%. That is not accounting; those are just stupid figures which are meaningless. A change should be made so that these things can be put in their true perspective.
My other point relates to the Estimates of Expenditure. These are so badly set out that one has to sit with a little adding machine to try to determine what the situation is. When one goes through them one finds, for instance, that internal commitments are 10% higher than last year—an amount of R45 million. Provision for depreciation constitutes 20% and for higher replacement costs of assets constitutes 10% of the increase.
I want now to deal mainly with the question of foreign exchange losses. In two years the Post and Telecommunications Department has lost R123 million in foreign exchange. When one reads the losses and one goes back—I went to the library, as the hon the Minister suggested—one finds that in 1982-83 the Department’s losses were only R5,8 million; in 1983-84 these losses were R12,8 million; in 1984-85 they were R75,2 million; and in 1985-86 they are expected to be R78,8 million. In other words, the losses are now expected to be 13 times more than they were four years ago. I asked the hon the Minister yesterday—and I would still like to hear from him—whether he really believes that his foreign exchange losses, will constitute only R67 million of the total losses of R78 million. Can he truthfully say to this House that that is all he expects his losses to amount to in this respect? I certainly do not see that happening at all.
Take, for instance, the cost of loans: Loans have gone up from R207 million in 1982 to R470 million today. How did that happen? It is impossible for a person reading these accounts to determine that. I therefore ask the hon the Minister whether he would please be kind enough to look at the accounts with a view to making them more clear for us than they have been in the past.
I would like to conclude by dealing with another subject, namely licencing of television-receiving dishes for private reception of TV satellite programmes. This comes under the Radio Act which is controlled by the hon the Minister. In the Cape Times of 14 August 1984 we read:
I also want to quote the following from the Rand Daily Mail:
The Radio Act, No 3 of 1952, is the Act in terms of which the Postmaster-General performs his functions under the control of the hon the Minister. Section 5 which deals with the prohibition of transmission or reception by radio and carrying on of certain other radio activities without licence or certificate, provides, inter alia:
I agree with that one hundred per cent.
It would be interesting to know why, in this particular case, this company did not possess the necessary licence or did not apply for the necessary licence because, if it has transgressed the law, then it should be charged. It was quite right to close it down if it had transgressed the law and did not have the necessary licence.
The question, however, that is really at stake is what the policy is regarding the granting of a licence to any homedweller to set up a satellite-receiving dish to receive programmes directly from TV satellites. One is able to pick up radio broadcasts from radio stations anywhere in the world without let or hindrance provided one has a licence. It is clearly understood that the Post Office’s satellite-receiving station at Hartebeesthoek has entered into certain agreements to pick up certain programmes, for which it pays a high fee, for broadcast in South Africa. Surely, however, if a person possesses a satellite-receiving dish with the necessary cables attached to his home television set, and such satellite-receiving dish conforms to specification laid down by the Post Office, as in the case of antennae in terms of the Radio Act, such a person should not be precluded from obtaining a licence.
Mr Chairman, the hon member for Bezuidenhout spoke about “stupid figures”, but he should not furnish such “stupid figures” here in the House.
On 1 April 1940 a young Post Office clerk came from the Sutherland district in the Cold Bokkeveld and began working in the General Post Office in Jeppe Street in Johannesburg. On 1 April 1985 it will be exactly 45 years later, during which period this young clerk progressed to the position of Postmaster-General. The man who has reached the top of the ladder in the Post Office is Mr Henry Bester, who is sitting over there.
We shall always remember this charming figure in the world of Posts and Telecommunications, also as the director of the South Atlantic Cable Company, as Deputy Postmaster-General of Finance and Data Processing—I have personal experience of that—as Regional Director of the Witwatersrand, as Director of Personnel and as General Chairman of the Afrikaanse Taalen Kultuurbond.
We know his predilection for hiking and mountain climbing. He went to school in the Nieuwoudtville area and later in Calvinia and Prins Albert. We know he will still be able to undertake his hiking tours through Calvinia’s beautiful world of flowers, with the beautiful mountain peaks of the Swartberg range at Prins Albert in the background. We are pleased that he was brought up in such a way as a youth and we believe that in the years that lie ahead he will inspire those who succeed him. We wish him every success.
We also want to convey our sincere congratulations to Mr Willie Ridgard, the new Postmaster-General, and wish him luck in the important task that is now awaiting him.
I have made several pleas in this House for a new post office to be built in Rosettenville one day. The hon the Minister said he hoped it would be possible for the building to be erected in 1986. I am fully aware of the present economic position in the RSA and shall convey the information to the voters in the spirit in which it has been given to me. We understand that the building cannot be erected immediately. We know what the economic position is and that is why we can appreciate the situation that is prevailing in this country.
In the few minutes still at my disposal, I want to congratulate the hon the Minister and the Post Office staff on Beltel, the new medium of telecommunication by means of the telephone. In addition we now have videotex in which information and data is stored in a computer and can be transmitted to the consumer on an ordinary television screen. This link-up can take place by means of a telephone line.
I think it is a powerful means of communication which he is putting at our disposal. With videotex the television set is used in conjunction with electronic equipment which is connected to a telephone. Information is drawn from a computer and then displayed on a television screen.
We find these means of communication so wonderful because they involve a two-way process. The information comes from the computer via the telephone line, but the consumer can also transmit information.
That is why I want to congratulate him on the wonderful term, Beltel, because it indicates clearly that one uses a telephone to get this information by means of the TV. In France this system is called Teletel; in Germany the Bildschirm Tex and in England the Prestel.
Eventually it will be possible for this Beltel system to be used as an unlimited source of information, for example financial information, share prices, interest rates, information on entertainment, travel information, flight schedules, holiday tours, purchases, accommodation and many other transactions.
It can be coupled to a personal computer and can even be used to send a letter or a message. What impressed me particularly was the purchasing of groceries which can be done electronically. One can order one’s groceries and subsequently cancel the order for certain articles. What we are going to have eventually, is a much more orderly means of purchasing which can be managed through Beltel. I should like to congratulate the Minister on this system.
In Britain the Prestel scheme has been expanded to 7 500 schools in which children are taught by means of computer programmes. I want to convey my sincere congratulations to the hon the Minister and the Post Office on the splendid Beltel system which can eventually be expanded to include 25 000 people.
Business interrupted in accordance with Standing Order No 19.
Progress reported and leave granted to sit again.
The House adjourned at