National Assembly - 13 June 2001
WEDNESDAY, 13 JUNE 2001
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PROCEEDINGS OF THE NATIONAL ASSEMBLY
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The House met at 15:01.
The Deputy Speaker took the Chair and requested members to observe a moment of silence for prayers or meditation.
ANNOUNCEMENTS, TABLINGS AND COMMITTEE REPORTS - see col 000.
QUESTIONS AND REPLIES - see that book.
NOTICES OF MOTION
Ms M M RAMAKABA-LESIEA: Chairperson, I hereby give notice that on the next sitting day of the House I shall move on behalf of the ANC:
That the House -
(1) notes -
(a) that the President, his Excellency Mr T M Mbeki, is on a four-
day state visit to Britain; and
(b) the tumultuous welcome the President and his delegation received
from the Queen and the British public;
(2) believes that this state visit will not only consolidate and strengthen the diplomatic relations between South Africa and Great Britain, but also result in more enhanced economic relations and co- operation between the two nations; and
(3) commends President Mbeki for his leadership and outstanding statesmanship in dealing with national, continental and international affairs.
[Applause.]
Mrs S V KALYAN: Chairperson, I hereby give notice that on the next sitting day of the House I shall move on behalf of the DP: That the House -
(1) notes that -
(a) the Minister of Health has for seven months delayed acting on a
World Bank-funded report recommending that the state supply anti-
Aids drugs to HIV-positive pregnant women;
(b) since the report was presented to the Government, an estimated
42 000 babies have been born HIV positive; and
(c) this report was commissioned by her department, yet she refuses
to disclose the contents of the report; and
(2) calls on the Minister of Health to acknowledge her failure to manage the HIV/Aids pandemic effectively and to implement the recommendations of the report.
Ms S C VOS: Chairperson, I hereby give notice that on the next sitting day of the House I shall move on behalf of the IFP: That the House -
(1) mourns the brutal murder of Cape Technikon electrical engineering student, Juan van Minnen, aged 20, of Fish Hoek, who was stabbed to death in a Metro Rail train carriage while attempting to protect his best friend who was also under attack by another assassin;
(2) recognises that Juan van Minnen is yet another statistic in a very long list of persons who, in recent years, have lost their lives or have been injured and traumatised by killers and thugs while travelling by train on this Metro Rail line and many others;
(3) calls on the relevant authorities responsible once and for all to ensure the safety and security of train passengers on this line and other lines; and
(4) extends to the Van Minnen family and friends its heartfelt sympathy.
Mr G D SCHNEEMAN: Chairperson, I hereby give notice that on the next sitting day of the House I shall move on behalf of the ANC:
That the House -
(1) notes that -
(a) the first South African humanitarian flight to Iraq arrived at
Saddam International Airport, Baghdad; and
(b) five tons of medical supplies were delivered by the Minister of
Public Enterprises, the hon Jeff Radebe, who headed a 100-person
delegation composed of officials, doctors, community leaders and
business leaders;
(2) believes that this mercy flight will strengthen the bond between Iraqis and South Africans, profile the plight of the Iraqi people and draw the attention of the international community to the need for humanitarian aid and solidarity with Iraq; and
(3) commends all patriots who have made this mercy flight possible.
Dr W A ODENDAAL: Chairperson, I hereby give notice that on the next sitting day of the House I shall move on behalf of the New NP:
That the House -
(1) notes with alarm that a new report warns -
(a) that due to Government negligence SA's roads may be heading for
a disaster and that the percentage of poor roads in South Africa
between 1990 and 2000 had shot up from 5% to 33%; and
(b) that if the road situation stays unattended, the state could
find itself as a potentially unsuccessful defendant in between
70 000 and 140 000 accident cases per annum;
(2) notes that, according to the report, if existing resources for roads were more effectively deployed, this ``would result in savings sufficient to pay for the entire proposed increase in roads expenditure’’; and
(3) urges the Minister of Transport to give heed to the warnings and recommendations in the report and to make road safety a priority, because people’s lives are at stake.
Prof L M MBADI: Chair, I hereby give notice that on the next sitting day of the House I shall move on behalf of the UDM:
That the House -
(1) welcomes the announcement by the Department of Education that matriculants who obtain a certain percentage pass aggregate would be rewarded with a special certificate;
(2) nonetheless notes with dismay that many schools do not have running water, electricity or toilet facilities, and that many educators and learners suffer due to crime, poverty and harassment; and
(3) calls upon the Minister of Education to realign his priorities to adequately reflect the most urgent needs of educators and learners, and cautions him from being narrowly focused on the end result and not on assisting the development of young intelligent minds.
Mrs L MALONEY: Chairperson, I hereby give notice that on the next sitting day of the House I shall move on behalf of the ANC:
That the House -
(1) notes that -
(a) Dr Molefi Sefularo, the MEC for Health in the ANC-led North West
Province, has dismissed all the white district surgeons in that
province; and
(b) most of these dismissed white district surgeons had separate
consulting rooms for blacks and whites in their surgeries;
(2) believes that this despicable practice of separate amenities is outright racism, which must be condemned by all;
(3) salutes the MEC for taking a firm stand against racism; and
(4) calls on all South Africans to join hands with the ANC in its fight to build a nonracial and nonsexist society.
[Applause.]
Dr S E M PHEKO: Chairperson, I hereby give notice that on the next sitting day of the House I shall move on behalf of the PAC:
That the House notes that -
(1) the United States of America House of Representatives’ Sub-Committee on Africa has called for the extension of sanctions against Iran and Libya;
(2) this committee alleges, inter alia, that Iran continues to threaten the national security of the United States of America;
(3) although Libyans stand convicted of killing American citizens and others by bringing down PanAm Flight 103, the Libyan government has failed to take responsibility for its actions in this matter;
(4) the PAC condemns any country which violates international law, but cautions that the USA must not be allowed to manipulate the United Nations and impose its will on other nations …
[Time expired.]
The CHAIRPERSON OF COMMITTEES: Order!
Mnr P J GROENEWALD: Mnr die Voorsitter, ek gee hiermee kennis dat ek op die volgende sittingsdag namens die VF sal voorstel:
Dat die Huis -
(1) daarvan kennis neem dat President Mbeki tans op ‘n staatsbesoek aan Brittanje en Skotland is;
(2) verder kennis neem dat President Mbeki tydens sy besoek aan Brittanje onder andere ook die Skotse Parlement sal toespreek;
(3) ‘n beroep doen op President Mbeki om kennis te neem dat die Skotte oor hulself regeer en dat hulle nie deur die Engelse vanaf Westminster geregeer wil word nie;
(4) ook ‘n beroep op die ANC-regering doen om kennis te neem van hierdie moderne tendens in die akkommodasie van gemeenskappe in plaaslike samelewings; en
(5) verder kennis neem dat ons eie Grondwet voorsiening maak vir hierdie moderne tendens, wat ter wille van vreedsame naasbestaan geïmplementeer behoort te word. (Translation of Afrikaans notice of motion follows.)
[Mr P J GROENEWALD: Mr Chairperson, I hereby give notice that on the next sitting day I shall move on behalf of the FF: That the House -
(1) notes that President Mbeki is currently on a state visit to Britain and Scotland;
(2) further notes that during his visit to Britain President Mbeki will, inter alia, also address the Scottish Parliament;
(3) appeals to President Mbeki to note that the Scots govern themselves and that they do not wish to be governed by the English from Westminster;
(4) also appeals to the ANC Government to note this modern trend in the accommodation of communities in local societies; and
(5) further notes that our own Constitution makes provision for this modern trend, which should be implemented in the interests of peaceful coexistence.]
Miss T E LISHIVHA: Chairperson, I hereby give notice that on the next sitting day of the House I shall move on behalf of the ANC:
That the House -
(1) notes that -
(a) an eleven-year-old, Ntombizakhona Khoza, will be South Africa's
representative in the global march against child labour; and
(b) Ntombizakhona will deliver a speech before the United Nations
General Assembly;
(2) wishes Ntombizakhona good luck in her mission; and
(3) calls on all those involved in child labour to hear the voices of children and desist from this practice.
[Applause.]
Ms M SMUTS: Chairperson, I hereby give notice that on the next sitting day of the House I shall move on behalf of the DP:
That the House -
(1) commends the Cape Town unicity for its successful efforts to make the city an attractive destination for investors;
(2) welcomes the finding of two independent investigations which have shown that -
(a) Cape Town can compete successfully with cities such as Buenos
Aires, Kuala Lumpur and San Diego in attracting investment;
(b) Cape Town came out tops compared with the Johannesburg and
Durban unicities; and
(c) the Cape economy will continue to do better than the rest of
South Africa; and
(3) congratulates the DA-run Cape Town unicity for focusing on job creation and giving hope to the unemployed residents of the city.
[Interjections.]
Mr M A MZIZI: Chairperson, I hereby give notice that on the next sitting day of the House I shall move on behalf of the IFP:
That the House -
(1) notes that -
(a) for the past seven years South Africa has been a thriving
democracy committed in action and word to upholding the rights
of individuals; and
(b) the spirit of the Constitution upholds the obligation of civil
servants to deal with citizens in a manner that is friendly,
efficient and punctual;
(2) expresses its disappointment that many civil servants are not serving the South African public in an exemplary manner and neither are they doing their bit to show that the new Government cares and indeed wants to ensure a better life for all; and
(3) calls on the Government to send inspectors incognito into busy Government offices to see what quality of service they are giving and to report on completion of the exercise to Parliament.
Mrs F MAHOMED: Chairperson, I hereby give notice that on the next sitting day of the House I shall move on behalf of the ANC:
That the House -
(1) notes that a witness alias ``Mr B’’ gave evidence in a trial of Pagad members accused of urban terror and the murder of Mr Rashaad Staggie;
(2) believes that the courage shown by ``Mr B’’ will motivate others to emulate this good example; and
(3) commends ``Mr B’’ for his bold stand against terrorism and lawlessness in our country.
[Applause.]
Dr P J RABIE: Mr Chairman, I hereby give notice that on the next sitting day of the House I shall move on behalf of the New NP:
That the House -
(1) notes with serious concern that -
(a) analysts are of the opinion that incidences of white-collar
fraud, mismanagement, dubious corporate ethics and insider-
trading are on the increase in the private sector; and
(b) this is an indication of the state of morality in the SA society
and that the lack of transparency in some Government departments
and entities is infiltrating the private sector; and
(2) urges the ANC-SACP-Cosatu alliance to set an example regarding good corporate governance and to cultivate a culture of accountability, for South Africa can ill afford to be classified as just another corrupt country at the tip of Africa.
Mr M N RAMODIKE: Chairperson, I hereby give notice that on the next sitting day of the House I shall move on behalf of the UDM:
That the House -
(1) notes -
(a) the high rate of emigration of South Africans as a result of the
high rate of crime; and
(b) that these daily atrocities of crime affect the less privileged
in this country, while those at the high echelons of Government,
and in particular the MECs in most of the provinces, are daily
caught in acts of mismanagement and corruption;
(2) expresses its disgust at the charges laid against Mr Jackson Mthembu, former MEC in Mpumalanga, with regard to fraud amounting to R151 million;
(3) notes that the ANC national structure had to intervene in numerous provincial structures in order to bring about stability as a result of a power struggle amongst leaders in the ANC-governed provinces;
(4) expresses its dismay at the ANC Northern Cape government’s inability to deliver, which has led to violent protests in that province; and
(5) condemns the ineptitude and mismanagement which have become …
[Time expired.]
MINIBUS-TAXI ACCIDENT NEAR RICHMOND IN KWAZULU-NATAL
(Draft Resolution)
Mr M T GONIWE: Chairperson, I move without notice: That the House -
(1) notes that two minibus taxis were involved in an accident near Richmond, KwaZulu-Natal, resulting in the death of nine passengers;
(2) expresses its condolences with the families and friends of the deceased;
(3) wishes the injured a speedy recovery; and
(4) calls on South Africans to adhere to safety precautions and drive safely on our roads.
Agreed to.
ALLOCATION OF SPEAKING TIMES
(Draft Resolution)
The CHIEF WHIP OF THE MAJORITY PARTY: Chairperson, I move the draft resolution printed in my name on the Order Paper, as follows:
That, notwithstanding Rule 106, the following times be allocated to parties for today’s debate on the statement of the Minister for Public Enterprises:
Minister: 20 minutes; African National Congress: 5 minutes; Democratic
Party: 4 minutes; Inkatha Freedom Party: 4 minutes; New National Party:
3 minutes; United Democratic Movement: 2 minutes; all other parties: 1
minute each.
Agreed to.
CONTROVERSY SURROUNDING SOUTH AFRICAN AIRWAYS
(Statement)
The MINISTER OF PUBLIC ENTERPRISES: Chairperson, hon members, in my budget speech on 1 June this year, I indicated that I was still awaiting a report from Transnet concerning SAA. I have since received the report from Transnet and briefed Cabinet this morning, which endorsed a course of action. I am now in a position to respond to the issues with the full authority of Cabinet.
SAA is the national flag carrier, with the majority ownership in SAA held by the state, exercised through Transnet. Thus, South Africa’s citizens and taxpayers have a right to know what has been going on in SAA.
The Minister of Public Enterprises represents Government’s shareholder interest in state-owned enterprises. This is a particularly important responsibility that I take very seriously, and Government prides itself on subscribing to global best practice on corporate governance, especially because many of these state-owned enterprises operate globally. Any collapse in corporate governance at enterprise levels has to be raised publicly and decisive action has to be demanded of the responsible boards.
It has now become clear that since 1998 there has been a systematic erosion of corporate governance at SAA. I will not address the financial status of SAA today as we are still awaiting the audited financial statements. Let me focus instead on four principal issues: the appointment of Mr Coleman Andrews as the Chief Executive of SAA and his conditions of employment; the use of consultants in SAA; the appointment of other expatriates as senior managers in SAA and their conditions of employment; and the establishment of Veer.com and its subsequent closure.
With regard to Mr Andrews’ appointment, the Transnet Board, on 8 May 1998, resolved that: ``the process followed to recruit an Executive Official for South African Airways is hereby approved’’ and thus the Chairman, Managing Director, Deputy Managing Director and Mr Cooper are hereby appointed a committee to select and appoint the successful candidate, finalise the salary package and conditions of employment and any other formalities necessary for appointment … ‘’
At the time of Andrews’ appointment, SAA was a division of Transnet, and the responsibility for such an appointment resided with Transnet. On 27 May 1998, Mr Coleman Andrews and the former MD of Transnet, Mr Saki Macozoma, entered into a contract for professional services. The conclusion of this agreement was not in accordance with the process outlined in the above resolution as the appointment committee never met, and therefore had no sight of the terms and conditions of appointment of Mr Andrews.
After the incorporation of SAA in April 1999, a second contract, entitled ``Professional Service and Confidentiality Agreement’’ was entered into on 24 July 1999 between Mr Andrews and Transnet (Pty) Ltd, represented by the former MD of Transnet. Again, the Transnet and SAA remuneration committees were not part of this process. These amendments related to Mr Andrews giving up his entitlement of $3 million long-term preference fees, and SAA committing to sell Mr Andrews 18 million shares in SAA at 1 cent per share.
As recently as 26 January 2000 a third contract was entered into, obliging SAA to provide Mr Andrews within 30 days of 26 January 2000 with the same number of shares on identical terms cited on 24 July 1999. This agreement also contemplated the possibility of granting Mr Andrews cash compensation in lieu of shares. Again, the agreement was signed by the former MD of Transnet without the knowledge or participation of either Transnet’s or SAA’s remuneration committees. The Board of Transnet has confirmed that at no point in the exercise was the former MD granted the authority to enter into such contracts.
The implications of the contract only emerged in July 2000, when Mr Andrews claimed that SAA was in default of its obligations regarding the shares and threatened to resign. On 13 July 2000, the SAA board resolved to pay Mr Andrews the cash value of the 18 million shares in order to avert his resignation. Concerns were then expressed by both Mr Roy Anderson, the chairman of the remuneration committee of SAA, and Dr Conrad Strauss, the chairman of the remuneration committee of Transnet, about the possible conditions of employment of Mr Andrews, including his remuneration.
At this juncture, the conditions of employment of Mr Andrews were not fully known by the above members of the respective boards of SAA and Transnet. It was only at the Transnet remuneration committee meeting on 21 July 2000 that the committee reluctantly resolved to ratify the employment agreement with Mr Andrews, noting that they were legally compelled to do so.
After several futile attempts by the Transnet board to obtain a copy of Mr Andrews’ contract, the chairperson of the Transnet board approached me as Minister to assist. After a meeting on 3 October 2000 attended by Ministers Omar, Erwin and myself, together with representatives from Transnet, the former MD of Transnet agreed to provide Mr Andrews’ employment contract to the board of Transnet for the first time, approximately two and a half years after Mr Andrews had been appointed.
The former MD of Transnet has previously stated that the appointment of Mr Andrews and his conditions of engagement were discussed and supported at the highest level in Government. Whilst Government, as shareholder, is consulted on strategic appointments in state-owned enterprises, we do not get involved in the discussions of remuneration packages, as this is the task of the remuneration committees of the respective boards.
Following a meeting in Zurich in February 2001 between Transnet and SAirGroup, it was resolved that Mr André Viljoen should be appointed as chief executive designate in order to prepare to take over from Mr Andrews once his contract had come to an end in June 2002. Mr Andrews, on being informed of the decision, indicated that he found the proposal of a chief executive designate unworkable, as it could result in confused lines of management responsibility in SAA, and proposed the early termination of his contract, as per conditions included in his existing contract. These, in summary, are the pertinent facts relating to the appointment and termination of the services of Mr Coleman Andrews.
From the above, it is quite apparent that the former MD of Transnet did not have the authority of the Board of Transnet or, subsequently, the Board of SAA, to enter into the various contracts with Mr Andrews. Further, it is unclear to me, even at this juncture, as to why the respective boards did not raise concerns earlier. Whilst they were unaware of the actual contents of the contractual agreement, they must have been aware of the payments made to Mr Andrews much earlier, as this should have been reflected in the financial reports tabled to the SAA board. I am still awaiting an urgent response to this matter from Transnet and SAA.
For the record, Mr Andrews has earned R232,2 million for the period June 1998 to April 2001, inclusive of his termination package. [Interjections.] This amount comprised a salary and bonus totalling R99,8 million, payment in lieu of shares totalling R58,6 million and a termination package totalling R73,8 million. [Interjections.] I am not yet in a position to comment on whether SAA received value for money from Mr Andrews, as we are still awaiting SAA’s financial results.
From the time Mr Andrews was appointed, a large number of consultants assisted him at SAA. For the period 1998 to 31 March 2001, payments totalling R243,1 million were made to consultants. The largest service provider during this period was Bain & Company, who earned R208,9 million. The majority of these appointments did not comply with company tender processes. No performance measures were put in place to assess the performance of these consultants, and yet Bain received performance-related fees, determined by Mr Andrews, which the internal auditors were unable to audit.
It needs to be pointed out that Mr Andrews was a founding member of Bain Capital, a material fact not disclosed to the board at the time of the initial appointment. SAA’s external auditors, Deloitte & Touche, requested that Mr Andrews’ actions in the appointment of consultants be ratified by the former MD of Transnet before they could sign off the financial statements for SAA for the 1999 financial year. It is unclear as to why the external auditor sought a sign-off from the former MD of Transnet, as his responsibilities at SAA were confined to that of a nonexecutive director, with no additional powers delegated to him by the Board of SAA.
Soon after the appointment of Mr Andrews in June 1998, he also appointed a large number of expatriates to fill key positions of leadership in SAA. In fact, the expatriates formed the core leadership of SAA for the period 1998 to 31 March 2001. Nine expatriates were paid R118 million over this period. The conditions of engagement of these expatriates were determined by Mr Andrews and not by the remuneration committee of SAA.
The external auditors, in reviewing the financial statements of SAA for 1999, again queried this arrangement and required that the former MD ratify these appointments, including the packages provided, prior to the sign-off of the financials of SAA.
Further, we have been advised that the expatriates received significant performance-related bonuses awarded by Mr Andrews, in the absence of any auditable performance measures being put into place. It does appear that this litany of breaches of corporate governance was informed by Mr Andrews’ belief that he could report directly to the former MD of Transnet, in spite of the existence of the SAA board. This was confirmed in a letter from Mr Coleman Andrews to the former MD of Transnet in June 1998.
A further problem with corporate governance emerged in early 2000, when Mr Mafika Mkwanazi, the current MD of Transnet, resigned as chairman of SAA. At the time, he cited work pressure at Transnet. It was subsequently established that the parallel process of decision-making in SAA, as outlined above, had resulted in the neutering of the SAA board to a point at which he had felt that it was best to step down.
The former MD then proceeded to appoint himself as the chairman of SAA, without any consultation with the shareholder. [Interjections.] This is generally unprecedented in the corporate world. At the very least, this would have required a resolution from the Transnet board. When this matter was brought to my attention as the Minister responsible for Transnet, I advised that I was not in a position to support the resignation of Mr Mkwanazi and advised the chairperson of Transnet to follow the correct procedure in selecting a new chairperson for SAA.
Even more bizarre was the letter by the former Chief Executive of SAirGroup, Mr Phillipe Bruggiser, to President Mbeki requesting that the former MD of Transnet be appointed Executive chairman of SAA. This was presented as a negotiating position on their part regarding their 10% call option in SAA. Following the departure of Mr Bruggiser, I met with the senior leadership of SAirGroup in Zurich, who dismissed this as a private view of Mr Bruggiser that had never been discussed at SAirGroup board level, let alone agreed upon.
Let me refer to Veer.com. On 30 October 2000 an application was made to the SA Reserve Bank by legal counsel for SAA, seeking approval to establish an offshore company in New York, called Veer.com. In the submission it was stated that: ``SAA has obtained the approval of the Minister of Public Enterprises, Mr Jeff Radebe, in accordance with the provisions of section 54 of the Public Finance Management Act, 1999, and will, in accordance with the provisions of that section, be notifying the Minister of Finance and the Department of Finance of its proposed establishment of Veer and of its intention to undertake the business.’’ I had no knowledge of any entity called Veer, nor was I approached to grant such approval as is required in terms of the Public Finance Management Act. This effectively amounts to fraudulent misrepresentation.
The first approach to me on this matter was made on 11 December 2000 when Mr Bheki Sibiya and Mr Andrews briefed me on the concept of Veer. Even at this briefing, no request was made to me to approve the establishment of Veer. To date, no formal approach has been made to me seeking approval for the establishment of Veer. The SAA board has subsequently terminated the Veer.com project on the basis of concerns about the business case for Veer. It must be pointed out, however, that approximately R106 million was spent on this project prior to its termination. I have requested from Transnet a clear indication of how this situation could have arisen and the actions that are proposed to deal with the incurring of this fruitless expenditure. [Interjections.]
Since 1994 we have constantly focused on the need to improve governance at state-owned enterprises. The corporate governance protocol for state-owned enterprises was endorsed by Cabinet in 1997. Shareholder compacts with key state-owned enterprises, including Transnet, to ensure accountability for actions taken at an enterprise level, and a clear delineation of responsibilities and functions between Government as the shareholder, the boards of state-owned enterprises and the executive management of state- owned enterprises, have been agreed to.
In response to these concerns, Government appointed Mr Don Ncube as the nonexecutive chairperson of SAA, with an explicit mandate to clean up the problems at SAA. Further, I have issued a directive to all state-owned enterprises that there should be full disclosure of all benefits, including remuneration, payable to all executive and nonexecutive board members, in their annual financial reports.
Should current investigations at SAA and Transnet reveal that there have been contraventions of the Companies Act and the Public Finance Management Act, or any other law, appropriate action will be taken against the parties and individuals concerned. Cabinet this morning expressed its outrage at the situation at SAA and fully endorsed the actions that have been taken to date. Furthermore, a committee of Ministers has been mandated to speed up further investigations into this matter. Cabinet wishes to assure Parliament and South Africa that decisive action will be taken against parties or individuals, whoever they may be, who are found guilty of acting improperly.
In conclusion, let the facts at SAA and Government’s actions pertaining to SAA speak for themself. Significant work still needs to be done to improve corporate governance in state-owned enterprises, and we are ready for the task that confronts us on this front. [Applause.]
Mr R J HEINE: Mr Chairman, hon Minister and hon members, I want to thank the Minister for his very frank disclosure on this whole sad saga that we are dealing with. It smacks of a tale of corporate misgovernance, gross negligence and enrichment at the expense of the taxpayers. It indicates what a travesty of a decision it was for Government to appoint Louise Tager as chairman and Saki Macozoma as CEO. No wonder Mr Macozoma is already passing the buck back to the Minister. Now I can see why.
Government is responsible for these appointments and they must now oblige all those Transnet directors still in office, including the chairman, to resign. The matter should also be referred to the Office for Serious Economic Offences for investigation. The matter is more serious because Prof Tager is a leading legal authority on the law of contracts and company law. She knew how responsible she was, but she failed miserably in carrying out her responsibilities as chairperson.
The whole Coleman Andrews saga is an unacceptable and sad occurrence in the history of SA. It makes us the laughing stock of the world. We have heard about the millions of rands involved, so I am not going to repeat that. But what is important is that in a country where 28,5% of households live in poverty, in this regard we have paid excessive salaries by any standard. Perhaps Saki Macozoma was right under the circumstances to classify this as ``danger pay’’, because this is what he had to say in the Business Day of 31 May:
Macozoma said yesterday that while Andrews’ package tended to be exaggerated, Transnet had to compensate him for moving to SA when the country was receiving bad publicity for its high crime levels.
[Interjections.] I stand here today on behalf of the millions of poor people in SA … [Interjections] … and I demand an answer as to how this was allowed to happen. The money, unfortunately, cannot be replaced and we cannot build schools or houses or undertake job creation schemes to empower people to help themselves. This type of management has led to SA’s downgrading as an investment destination.
Let me remind hon members what the hon Tony Leon said yesterday, and I quote:
The Minister for Public Enterprises is, in terms of the law, the representative of the 80% majority shareholder in SAA via Transnet. Therefore he should or ought to have exercised, at the very minimum, some fiduciary form of corporate governance. And what of Transnet chairman Louise Tager and former Transnet Managing Director, Saki Macozoma? Their responsibility in this matter is much greater and more direct, and on the face of it, more culpable. They were also paid exorbitant salaries and extravagant perks to exercise corporate governance and to act in the public interest. On the face of it, they appeared to have failed on both counts.
But the greatest scandal in state ownership is that for the past three years we have been trying to ascertain the extent of Coleman Andrews’s remuneration package. In each case, full details were never disclosed. But I have sympathy with the Minister; he was also trying, but he could not get it. [Applause.]
Mr M S M SIBIYA: Chairperson, next Wednesday the SAA will brief the Portfolio Committee on Public Enterprises on restructuring and, probably, on the role played by the previous turnaround specialist at SAA.
The discussion that we are having today might therefore be premature. Realising that the publicity around this controversial issue is damaging the image of the SAA and the country as a whole, the IFP welcomes the statement of the Minister for Public Enterprises, who requested this debate which we see as a commitment to open governance.
The IFP supports the principles of a socially responsible free-market economy. Therefore a profit-sharing agreement with a turnaround specialist is not out of order. We therefore realise that the market value for the remuneration and incentives of a turnaround specialist always come at a very high price.
The IFP is of the opinion that incentives should be based on a trade profit alone, and not be applicable to a profit of a capital nature. If the total remuneration package should come at such a high price, that would exceed the norms of the South African market. We expect that such incentives should have been declared with the shareholder of the enterprise, in this case the Minister for Public Enterprises.
We believe that there should have been a considerable turnaround in the status of the SAA concerning the safety of flights, efficiency and achieving substantial profits, and not only profits on the sale of an aircraft. Moreover, indications are that profits might have benefited Mr Coleman Andrews more than the SAA. If this be the case, then it is, indeed, a sorry state of affairs for the public enterprise.
The previous managing director has indicated that the highest authority approved the agreement regarding the turnaround specialist. We believe that there might have been a misunderstanding between the Minister and his technocrats in this regard, which has led to the media speculation on SAA’s affairs. The major issue with regard to the turnaround specialist issue in South Africa is value for money. The IFP is of the opinion that this matter is not beyond resolution, and we urge that reason and collegiality should be the overriding factors in these matters.
The Minister’s statement appears to reveal a shocking state of affairs. The IFP calls for a further and thorough investigation into this matter.
Dr P J RABIE: Chairperson, hon Minister and hon members, the fact that the former Transnet MD, Mr Saki Macozoma, was given a free hand by the SAA board and Transnet to appoint Mr Coleman Andrews to head SA Airways, is reason for serious concern, especially seen in the light that Mr Andrews was paid an estimated R233 million for his two-and-a-half-year tenure.
The question we must ask ourselves is: Where was Mrs Stella Sigcau? Was she involved in this? She must have known about this particular appointment, because she was the responsible Minister at the time.
A number of other questions must be answered. Firstly, did Transnet pay Mr Andrews more that R100 million in haste to get rid of him? Secondly, was there undue political interference from the Department of Public Enterprises in the day-to-day operation of the SA Airways? Regrettably, this accusation is mooted in the press. Why was Bain and Company selected by the board of the SA Airways to act as consultants regarding the unanimous decision of the board to select Bain, while the offers of Bain and Airons were almost equal?
Business Report states that Mr Andrews was a founding member of Bain Capital, a sister company of the consulting firm, and the hon the Minister has just confirmed this. We thank him for his honesty. According to Business Report’s investigation, Mr Macozoma gave Mr Andrews carte blanche powers to proceed with any transactions of all expenses up to R20 million without requiring board approval. I think members will agree with me that R20 million is a vast amount of money.
What reasons were furnished for allowing Mr Andrews such free rein? Mr Andrews recruited a number of United States citizens to fill senior positions at SA Airways on dollar-based contracts, whereas senior South Africans employed at SA Airways at the same level earned one twentieth to one tenth of the salaries of their US colleagues. The present chief executive officer of SA Airways is a South African, and I am proud to state that.
The purchase of 5 Boeings and the hire purchase of 16 Boeings to the tune of R4,7 billion may affect our future balance of payments for the next 20 years, according to Mike Schussler, an economist of Tradek. The departure of Mr Andrews and the proposed decision to upgrade the South African fleet must be investigated in a transparent and equitable manner. The present uncertainty regarding SA Airways, costs regarding leases, fuel maintenance, pilot costs and the loss of cargo capacity is untenable.
It will be a sad day for South Africa if the controversy regarding SA Airways impedes the process of privatisation of the four big parastatals, namely Transnet, Telkom, Eskom and Denel. If any contraventions of the Companies Act occurred, it is requested that the Minister takes speedy action in this regard. [Applause.]
Mr C T FROLICK: Chairperson and hon members, while the key principle of restructuring is sound, strong cognisance must be taken of the fact that any negative trends in this regard will raise tension in the local market and also send mixed signals to South Africans. Today’s revelations by the Minister is really a shameful incident in our young democracy. The openness with which Mr Radebe is dealing with this matter must be commended. It is this approach which is sadly lacking in other departments.
The time lapse between becoming uncomfortable and taking decisive action by the Transnet board must be investigated. Why did they have to wait two and a half years before bringing it to the attention of the Minister? The UDM supports the steps as proposed by the hon Minister and calls on Government to stop at nothing in bringing all culprits to book. It now appears that Mr Coleman Andrews was on a looting spree in South Africa, before packing his bags and going back to America. The most valuable lesson for South Africans and the Government is that more should be invested in home-grown patriotic South Africans who can do a better job than foreigners and at a lower price.
We also would like to pause for a few seconds and pay tribute to workers in South Africa. While we lament the possible loss of millions in taxpayers’ money, we must not lose sight of the plight of the workers at state-owned organisations. They have real fears and concerns about job security, and the allegations around SAA only serve to fuel uncertainty and anger. It seems at times like these that, indeed, the rich are getting richer, and the poor are getting poorer. [Applause.]
Ms C DUDLEY: Chairperson, the ACDP commends the Minister for Public Enterprises on his open and in-depth revelation of the relevant facts. We are astounded at the enormity of this fraudulent mismanagement. However, why was this not picked up sooner? The ACDP calls for prosecutions against board members who have contravened the Companies and Public Financial Management Acts, as well as the institution of civil action for the recovery of state losses occasioned by negligence of board members.
We call for a full investigation into the R4,3 billion fleet upgrade, which would include an investigation into the process of the sale of 15 Airbus aircraft and the purchase of 21 new Boeing 737-800s whilst Mr Andrews was at the helm of SAA. [Interjections.] I would like to pray for whoever Mr Manuel would like me to pray for. [Interjections.] God help Coleman. [Interjections.]
Mr P J GROENEWALD: Chairperson, I would like to say to the hon Minister that in Afrikaans we have a saying that goes: ``Andrews het vir julle pampoen gerol, en toe vang julle hom en toe is dit ‘n vrot pampoen.’’ [Gelag.] [Andrews rolled you a pumpkin and when you caught it, it was a rotten pumpkin. [Laughter.]]
In one minute I cannot say much, but what I want to say is that my salary is known to the public of South Africa. The salary of each and every member of Parliament and the Ministers, even the President, is open to the media and is known to the public. The FF proposes that the salaries of all senior officials in any business, company or organisation in which the Government has more than 50% shareholding should be known by the media and the taxpayers of South Africa, so that each and everyone knows what is going on and where the taxpayers’ money is going.
Miss S RAJBALLY: Chairperson, the MF is disappointed with the allegations of fraud against SAA and several other events that brought its former chief executive, Coleman Andrews, into conflict with the Public Enterprises Ministry. Our Government has more pertinent commitments to attend to without having the added burden of dealing with SA Airways’ role in the 1999 demise of SunAir, Government’s privatised black empowerment vehicle and SAA’s decision to set up an e-commerce travel agency back in New York.
The MF recommends that SAA apologises for their unscrupulous behaviour and settles its debt with the liquidators of SunAir. [Interjections.] It also recommends that SAA refrains from any further fraudulent activities. [Interjections.] The MF supports Government’s initiative in dealing with the allegation concerning SA Airways. [Applause.]
Mr C AUCAMP: Chairperson, let me begin with a statement which goes: ``Except for some highly specialised technical expertise, there is no office in South Africa, especially on the side of management, that could not be filled by a South African’’. Let us accept that today. That even includes teachers from Cuba. [Interjections.]
Suddenly, a total of R700 billion is involved between Mr Andrews, the consultants, the nine expatriates and Veer.com. We ask them to go into that fully, and if there are any contraventions, there must be prosecutions. Mr Willie Hofmeyr’s Asset Forfeiture Unit must do its job.
An HON MEMBER: Heath.
Mr C AUCAMP: Yes, perhaps Heath. The question is: Where does the responsibility of the Minister lie? I asked the question, because I do not know the answer. Regarding danger pay, what about our farmers?
I want to conclude with this statement: ``The only good Coleman I know, is a handy little container for braaivleis and beer.’’ Let us learn from that as well. [Laughter.]
Mr S T BELOT: Chairperson and hon members, when allegations were made in the media about SA Airways, the Minister did the most reasonable and sensible thing by asking for a report, which he shared with this House today. We support that approach.
The statement made by the Minister, I need to say, is about the very important subject of corporate governance. The ANC wishes to acknowledge and recognise the progress made by this democratic Government in introducing the concept and practice of corporate governance which never existed in this country. We need to take this forward.
To us, the ANC, corporate governance is an instrument of economic and social transformation. The objective of restructuring is to achieve the goal of transformation. We believe, therefore, that corporate governance and the protocol on good governance, as adopted by Government, would eliminate all areas of possible misunderstanding and confusion on the relevant roles and functions. Once more, we commend Government for putting in place this tool which was not there before.
Through corporate governance, Government is able to give a clear mandate to state-owned enterprises. In our case the mandate is about economic and infrastructure development. It is in this context, not in the old apartheid context of day-to-day interference, that we wish to see this corporate governance taken forward.
I need to say that there is something that nearly disturbed us, but my colleague Mr Heine corrected it. Therefore the ANC wishes to confirm and endorse the Government’s adoption of the protocol on good governance and the shareholder compact, because we believe that Government departments which are entrusted with a responsibility of managing shareholders should attend to these matters in a uniform manner. This can be achieved through adopting the same process, including board appointments, and remunerations and introduction of policies.
There has to be strict compliance with these policies as soon as they are adopted. This will assist in eliminating the fragmented approach in handling board-related matters. Therefore we urge that shareholding of state-owned enterprises should be handled in a manner that allows for growth and prosperity by defining the mandate of state-owned enterprises and allowing for optimal maximisation of state-owned enterprises.
I also need to point out that we as the ANC believe that in the meantime extensive workshops for departments, provinces and state-owned enterprises are very necessary to enhance the levels of awareness to entrench the culture of good governance, both in Government and in business. These workshops may also aim at clarifying the responsibility of the Government as the sole or major shareholder and how it relates with other shareholders where it is not the sole shareholder. We believe that these workshops should be extended to all public entities in order to popularise a good governance ethos within the entities.
In conclusion, we welcome the explanation given by the hon Minister and support the proposed steps to get further explanations on outstanding matters. [Applause.]
Debate concluded.
SOUTH AFRICAN WEATHER SERVICE BILL
(Consideration of Bill and of Report thereon)
Order disposed of without debate.
Report adopted and Bill agreed to.
The House adjourned at 17:56. ____ ANNOUNCEMENTS, TABLINGS AND COMMITTEE REPORTS
ANNOUNCEMENTS:
National Assembly and National Council of Provinces:
- The Speaker and the Chairperson:
(1) The Joint Tagging Mechanism (JTM) on 12 June 2001 in terms of
Joint Rule 160(3), classified the following Bill as a section 75
Bill:
(i) "Woordeboek van die Afrikaanse Taal" Act Repeal Bill [B 30
- 2001] (National Assembly - sec 75).
- The Speaker and the Chairperson:
The following papers have been tabled and are now referred to the
relevant committees as mentioned below:
(1) The following papers are referred to the Portfolio Committee on
Trade and Industry and to the Select Committee on Economic
Affairs. The report of the Auditor-General contained in the
following paper is referred to the Standing Committee on Public
Accounts for consideration and report:
(a) Report and Financial Statements of the Department of Trade
and Industry for 1999-2000 [RP 66-2001], including the Report
of the Auditor-General on the Financial Statements of Vote 33
- Trade and Industry for 1999-2000 [RP 142-2000].
(b) Executive Summary of the Report of the Department of Trade
and Industry for 1999-2000 [RP 66-2001].
(2) The following paper is referred to the Portfolio Committee on
Minerals and Energy and to the Select Committee on Economic
Affairs:
Report of Mintek for 1999-2000.
National Assembly:
- The Speaker:
Bill passed by National Assembly on 13 June 2001: To be submitted to
President of the Republic for assent:
(i) South African Weather Service Bill [B 54D - 2000] (National
Assembly - sec 75).
TABLINGS:
National Assembly and National Council of Provinces:
Papers:
- The Speaker and the Chairperson:
Report of the Office of the Auditor-General on the Budget of Income and
Expenditure for 2001-2002 [RP 60-2001].
- The Minister for Provincial and Local Government: Draft Regulations relating to Chapters 5 and 6 of the Municipal Systems Act, 2000 (Act No 32 of 2000), submitted in terms of section 120(7)(a) of the Act.
Referred to the Portfolio Committee on Provincial and Local Government
and to the Select Committee on Local Government and Administration for
consideration and report.
COMMITTEE REPORTS:
National Assembly:
-
Report of the Portfolio Committee on Water Affairs and Forestry on the National Forest and Fire Laws Amendment Bill [B 14B - 2001] (National Council of Provinces - sec 76), dated 13 June 2001:
The Portfolio Committee on Water Affairs and Forestry, having considered the subject of the National Forest and Fire Laws Amendment Bill [B 14B - 2001] (National Council of Provinces - sec 76), referred to it and classified by the Joint Tagging Mechanism as a section 76 Bill, reports the Bill without amendment.