General News

Public entities can’t withhold financial documents from Parliament, committee hears

By Khulekani Magubane
3 Aug 2021
News24 article here
Parliament's legal advisors have told its Portfolio Committee on Mineral Resources and Energy that it was entitled to request documents from entities in its portfolio.

Parliament’s legal advisors have told its Portfolio Committee on Mineral Resources and Energy that it was entitled to request documents from entities in its portfolio.
Ashraf Hendricks/GroundUp

 

  • Parliament’s legal advisors have told its Portfolio Committee on Mineral Resources and Energy that it was entitled to request documents from entities in its portfolio.
  • The Central Energy Fund and Nuclear Energy Corporation posited that they were accountable to submit to the minister.
  • The committee was advised that its oversight duty empowered it to required the documents be given to the committee.

Parliament’s Portfolio Committee on Mineral Resources and Energy has been advised that there is no basis for the Central Energy Fund (CEF) and the Nuclear Energy Corporation of South Africa (Necsa) to decide to withhold important documentation from the legislature.

This emerged from a meeting between the committee and Parliament’s legal experts. The committee was seeking clarity on whether the state-owned energy companies had any legal basis for failing to provide Parliament with strategic documentation.

The entities told the committee they were of the view that they were not compelled to table their annual reports and financial statements to Parliament, but that they instead had an obligation to submit the documents to the Minister of Mineral Resources and Energy as the shareholder representative.

The entities also said they were of the view that strategic documentation, including the strategic plans and annual performance plans, should only be submitted to the shareholder representative as they were of a sensitive nature and disclosing them would have an impact on the markets.

Necsa has only had a fully constituted board for just over a year and a half, while the board of the now-broke Petro SA, which falls under the CEF, was dissolved in May and the Strategic Fuels Fund has had to go to court to get back 10 million barrels of strategic oil reserves it had sold in December of 2015.

The Portfolio Committee on Mineral Resources and Energy told the CEF and Necsa that it differed with their opinion on the issue and sought legal advice from Parliament’s legal advisors.

Parliamentary legal advisor Andile Tetyana said section 52 of Public Finance Management Act (PFMA) outlines a legal obligation to submit to the Department of Mineral Resources and Energy a corporate plan for ministerial approval. The entities must be profitable and declare dividends. They do not receive money from the appropriation bill.

“Necsa and [the] CEF, according to the PFMA, are public entities and perform their functions according to legislation. If you look at the revised framework of the annual performance plans, it is very decided when it comes to these entities,” said Tetyana.

Tetyana said even though the PFMA read with National Treasury instructions meant that entities did not get their capital from the fiscus, it did not negate Parliament from requesting such documents.

“The committee is at liberty to request these documents. The reason why other entities submit documents to Parliament is for transparency and oversight, and to improve performance. The PFMA itself might have to be amended, but this does not sterilise Parliament’s oversight function,” Tetyana said.

Tetyana added that even if the CEF and Necsa did not necessarily get their capital from the fiscus, the law gives provisions for bailouts upon request and consideration, and there is no legal reason why these entities cannot submit these documents to Parliament if it requests them.

The DA’s James Lorimer said he understood that the provision of strategic documents and annual performance plans had always been submitted previously, so failure to respond positively to Parliament’s request was a break in previous practice, at the very least.

“We are entitled to ask for these documents. That is absolutely something we should do in the spirit of transparency. The CEF costs us R3 billion in the medium term and Necsa even more,” said Lorimer.

The ANC’s Thokozile Malinga said she was baffled by the suggestion by CEF and Necsa that they were only accountable to the Mineral Resources and Energy Minister Gwede Mantashe, when the minister himself was wholly accountable to Parliament.

“If these entities are getting their budgets from the Department of Mineral Resources and Energy, I find it difficult to understand why these documents are not coming before Parliament. Why do they feel like they should be an exception to the rule, on their part?” asked Malinga.

The ANC’s Mika Mahlaule said the CEF is a holding company of Petro SA and the Strategic Fuels Fund, which have all faced a litany of financial and governance troubles that Parliament is entitled to ask about and look into.

“There has been a precedent that these submissions would be made. In schedule 2 it says they are not obligated to appear for those submissions, but the opinion gives us rights to, in the best interests of the country, request such information as a committee of Parliament,” said Mahlaule.

The EFF’s Phiwaba Madokwe said the suggestion that CEF and Necsa could withhold strategic documents from the legislature, even if that documentation was requested, weakened the oversight duty of Parliament.

“It is in the best interest of South Africans that Parliament is privy to the documents of entities which are funded by the state, regardless of the schedule of company in question. We don’t have a concise idea of what is happening in these three companies that are expected to merge,” said Madokwe.

Committee chair Sahlulele Luzipo said: “The rule does not say that information cannot be submitted if so requested in Parliament. Members have been trying to stress that. That actually means we, as a committee – at any given moment outside of procedure –  whatever information we need can be requested”.

Luzipo said while there is a difference between formally tabling to Parliament and submitting to a committee of Parliament, and the entities do not have a leg to stand on where it relates to refusing to submit documentation at a committee’s request.

Tetyana said: “There is a legitimate government seeking these documents. Section 56 of the Constitution is clear that this institution is empowered to request documents and even use the stick approach to compel people when there is a legitimate expectation to do so”.

He said a portfolio committee can make requirements of entities and departments or organs of state and that any refusal on the part of an organ of state to provide that information would be “unprecedented”.

Frank Jenkins, senior Parliamentary legal advisor, saidwhile there is no legal obligation to table strategic documentation formally before, that does not sterilise the power of Parliament to request that documentation.

“When these companies cease to be a going concern, that is when government steps in either through bailouts or in the form of equity. Depending on the strategic importance of the entities, it is government steps in,” said Jenkins.

Jenkins said while these entities were meant to be self-sustaining, they are still public entities performing public functions and are organs of the state who should subject themselves to government.

While matters of competitive interests and market sensitivity can be discussed and clarified, the entities are not able to reject a legitimate request by Parliament to look into strategic documentation in the name of transparency, oversight and accountability, Jenkins said.

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