Weekly Political and Economic Review 26 July 2019 1. Priority Bills 1.1. Draft Tax and Rates Bills − National Treasury has published the 2019 Draft Tax Administration Laws Amendment Bill (TALAB), the 2019 Draft Taxation Laws Amendment Bill (TLAB) and the 2019 Draft Rates and Monetary Amounts and Amendment of Revenue Laws Bill (Draft Rates Bill) for public comment; − Submission of comments on the draft bills close on the 23 rd of August 2019; − All Draft Bills give effect to tax proposals made in the 2019 Budget Review; − The Draft Rates Bill contains tax announcements dealing with changes to the rates and monetary thresholds and increases of the excise duties on alcohol and tobacco; − The Draft TLAB and TALAB provide for legislative amendments to implement the more complex tax announcements made in the Budget Review; − National Treasury, along with the South African Reserve Bank (SARB) will also be engaging with stakeholders through workshops after written comments have been received;
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Weekly Political and Economic Review 26 July 2019...Jul 26, 2019 · 1. Priority Bills 1.1. Draft Tax and Rates Bills − National Treasury has published the 2019 Draft Tax Administration
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Weekly Political and Economic Review 26 July 2019
1. Priority Bills
1.1. Draft Tax and Rates Bills
− National Treasury has published the 2019 Draft Tax Administration
Laws Amendment Bill (TALAB), the 2019 Draft Taxation Laws
Amendment Bill (TLAB) and the 2019 Draft Rates and Monetary
Amounts and Amendment of Revenue Laws Bill (Draft Rates Bill) for
public comment;
− Submission of comments on the draft bills close on the 23rd of August
2019;
− All Draft Bills give effect to tax proposals made in the 2019 Budget
Review;
− The Draft Rates Bill contains tax announcements dealing with changes
to the rates and monetary thresholds and increases of the excise duties
on alcohol and tobacco;
− The Draft TLAB and TALAB provide for legislative amendments to
implement the more complex tax announcements made in the Budget
Review;
− National Treasury, along with the South African Reserve Bank (SARB)
will also be engaging with stakeholders through workshops after written
comments have been received;
− The Standing and Select Committees on Finance are also expected to
make a call for public comment;
− After all comments have been received, the Bills will be tabled for
consideration by Parliament.
1.2. Appropriations Bill for SOE Funding Approved
− The National Assembly approved the Appropriations Bill (2019) which
will provide funding for ailing State-Owned Enterprises (SOEs);
− The Bill will provide R26 billion to Eskom for the current financial year
and R33 billion over the next year;
− It will also provide more cash for ailing SOEs such as South African
Airways (SAA), Denel, and R3.2 billion for the South African
Broadcasting Corporation (SABC);
− Speaking at the debate on the bill, Finance Minister Tito Mboweni stated
that the Appropriations Bill should be viewed against the background of
a weak economy;
− Mboweni further highlighted the impact of the bailout on taxpayers and
the economy;
− The Democratic Alliance (DA), Economic Freedom Fighters (EFF), and
the Freedom Front Plus all objected the bill;
− The DA stated that the bill will only result in budget cuts in other areas,
such as service delivery for the poor;
− The Bill has been passed on to the National Council of Provinces for its
consideration.
2. President Ramaphosa to Seek Judicial Review after Public Protector’s
Findings
− President Cyril Ramaphosa, during a media briefing, confirmed that he will
be seeking a judicial review on the Public Protector’s report regarding the
Bosasa saga;
− This is after the Public Protector found that Ramaphosa deliberately misled
Parliament regarding a R500 000 Bosasa donation to fund his CR17 ANC
Presidential campaign;
− The President has accused Public Protector Busisiwe Mkhwebane of
overstepping her mandate and violating the Public Protectors Provisions
Act in her findings;
− He is also of the view that her findings were fundamentally and irretrievably
flawed, lacking a sound legal basis;
− In seeking the review, the President believes he will be protecting the
integrity of his office;
− He has also expressed confidence in the belief that the courts would arrive
at a different conclusion;
− Mkhwebane has stated that the investigation falls within her mandate;
− She has welcomed the President’s decision and remains confident that her
findings are factual, rooted in sound application of the law;
− The EFF has called on the President to take an urgent leave of absence
until the matter is resolved;
− DA leader Mmusi Maimane, who first bought the issue before Parliament
has sternly warned the President to fund the legal proceedings from his
own pocket;
− The DA is also calling for the National Assembly to establish an ad hoc
committee to investigate the President.
3. ConCourt Dismisses Mkhwebane’s Appeal
− The Constitutional Court, on the 22nd of July, upheld the High Court’s
decision for Public Protector Busisiwe Mkhwebane to pay for 15% of the
South African Reserve Bank’s (SARB) legal fees in the ABSA/Bankorp
matter;
− Advocate Mkhwebane in 2017 had ordered the Special Investigating Unit
(SIU) to recover over R1 billion from Absa on behalf of the SARB;
− The High Court had found that Mkhwebane had not been honest during her
investigation;
− Her report, along with its remedial action, were later reviewed and set aside
in 2018;
− The court’s majority judgement found that Mkhwebane acted in bad faith
and misled the court;
− The Office of the Public Protector has stated that they will be studying the
court’s judgement;
− Meanwhile, a group called Democracy in Action has launched a “Hands Off
the Public Protector” campaign to raise funds;
− The group has stated that all funds raised will be sent to the Office of the
Public Protector to assist her in paying her debt.
4. Gordhan and Mkhwebane Battle it Out in Court
− The battle between Public Enterprises Minister Pravin Gordhan and Public
Protector Busisiwe Mkhwebane over the SARS ‘rogue unit’ findings made
its way to the Pretoria High Court on the 23rd of July;
− Minister Gordhan bought forward an urgent court application to have the
Public Protector’s report reviewed and set aside;
− Mkhwebane had found that the establishment of the High Risk
Investigations Unit approved by Gordhan during his tenure as Finance
Minister, was unconstitutional;
− As part of her remedial action, Mkhwebane gave President Ramaphosa 30
days from the release of the report to take disciplinary action against
Gordhan;
− The President’s counsel, however, says that the process would be
impossible to implement within the deadline;
− She had also given the National Assembly Speaker Thandi Modise 14 days
to refer Gordhan to the Parliamentary Ethics Committee;
− The Court reserved its judgement for Minister Gordhan’s application;
− After hearing the various arguments brought before the court, Judge Sulet
Potterill said she need more time to formulate her judgement;
− The judgement will be delivered at a date both parties will agree on, but not
before the 4th of August which marks the end of the Public Protectors 30-
day deadline.
5. Commissions of Inquiry
5.1 PIC Inquiry
5.1.1 Dr Dan Matjila
− Former PIC CEO Dr Dan Matjila continued his submission before the
Commission on the 22nd of July;
− Matjila began his testimony by detailing the PIC’s investment into Erin
Energy, which he has described as regrettable;
− The US-based oil company later filed for bankruptcy, resulting in a loss of
around R4.6 billion for the PIC;
− According to him, the investment was strategic and would allow for the PIC
to own 30% of COMAC Energy and shares, a seat at the board, and
presence on the audit and risk committee;
− He also took the opportunity to bring criticism to PIC former Head of Risk
and Compliance Paul Magula;
− According to Dr Matjila, Magula was lined up to take over from his CEO
position;
− Dr Matjila believes Magula was part of a larger campaign to discredit his
authority as PIC leader and have him dismissed;
− The former CEO also affirmed that the PIC’s involvement with Independent
Media South Africa (INMSA), Sagarmatha and Ayo Technologies (AYO)
was not due to his close relationship with relationship with Sekunjalo
Investment Holdings chairman, Dr Iqbal Survé;
− Dr Matjila also defended the PIC’s R4.6 billion investment into Ayo
Technology Solutions, stating that it gave the asset manager increased
exposure in the information and communications technology sector;
− Dr Matjila stated that the Commission was focussing too much of its
attention on the minor shortcomings of the PIC;
− According to him, 98% of the portfolio is doing extremely well.
5.2 State Capture Inquiry
5.2.1 Roy Jankielsohn
− The Commission, once again, focussed its attention on the Vrede dairy
farm project on the 22nd of July;
− The project, intended to offer support to farmers in the Free State town of
Vrede came under the spotlight after Gupta-linked company Estina unduly
benefitted from the project;
− As part of the project, one hundred black emerging farmers were promises
five cows each, which they have never received;
− It was revealed last year that at least R30million was paid to the Gupta
family through the project;
− Roy Jankielsohn, a DA member of the Free State legislature, took to the
stand detailing the responses he received following his probe into the
matter;
− Jankielsohn informed the Commission that Estina did not meet the
requirements of the dairy farm project;
− It has also been revealed that the Free State government is still forking out
R20 million a year for the project, which is now being headed up by the
Free State Development Cooperation;
− The Commission also heard that beneficiaries of the project are still being
side-lined, which Jankielsohn described as ‘very strange’;
− "These beneficiaries should have been at the core of the implementation
of this project and should have benefited from it”.
3.2.1. Albertus Venter
− Deputy Director-General in the Free State premier’s office Albertus Venter
once again appeared before the Commission on the 22nd of July;
− Venter informed the Commission of an illegal contract for the project’s
beneficiaries;
− He recalled being presented with a contract between the government and
the beneficiaries by the Chief Director for District Services in 2013;
− Venter’s opinion on the drafted and signed contract was sought;
− He recalls being given the names of beneficiaries which did not appear on
the contract;
− He further stated that the contract contained certain problematic clauses;
− This included that beneficiaries would be allowed to sell their stake in the