Icasa is leaderless and clueless - outgoing councillor

In an exit report submitted to Parliament this week, an outgoing councillor for the Independent Communications Authority of South Africa (Icasa) described the regulator as void of leadership and operationally inefficient.

The document, circulated to members of the parliamentary communications committee and the telecommunications and postal services committee, laid bare a number of issues councillor Joseph Lebooa said he has observed during his four years at Icasa.

He urged the parliamentary committees to review a number of matters, including:

  • An alleged “fraudulent” decision by the regulator to allow Wireless Business Solutions (WBS) to continue operating on expired licences without due process;
  • An “illegal” moratorium on seizures and closures of unlicensed operations; and
  • The decision to execute the minister of communication’s “unconstitutional directive” to terminate his term of office prematurely, along with three other councillors.

In the exit report, Lebooa said he believed a leadership gap at Icasa stopped it from resolving professional and technical expertise matters, as well as structural issues, that were critical for its success.

In line with audit requirements, Lebooa said one of his responsibilities was to trace all licensees and collect monies owed to Icasa. A prominent case in this regard was that of WBS’s sister company, iBurst, which had been “defaulting and defrauding Icasa in the payment of its licence fees for many years” before Icasa inspectors took the matter into their own hands and shut down its operations, in accordance with the Icasa Act and the Electronic Communications Act.

‘A ploy to do wickedness’
The shutdown led to a court case in which WBS lost on all counts and was found to be operating illegally. Despite this, as the Mail & Guardian reported in October, Icasa went on to write off R75-million in fees and reinstated the company’s licences.

In the report, Lebooa said the seven recommendations that formed the basis for the restoration of the licences, which were approved by the Icasa council, were all flawed.

“I want to unequivocally state once more that this reinstatement action by Icasa is not just a misinterpretation of the court judgment, but a deliberate ploy to do wickedness and reinstate the operations of WBS, while ignoring the court judgment and robbing citizens ... of millions of rands. This action by Icasa is strictly criminal in my opinion and deserves the most scrutiny by Parliament.”

Icasa spokesperson Paseka Maleka said the council did not permit WBS to continue operating on the expired or lapsed licences. “On the contrary, Icasa took the necessary steps to collect outstanding licence fees. However, the court interdicted Icasa from taking any further steps until judgment in the matter was delivered. WBS has since paid its licence fees.”

WBS chief executive Clinton Holroyd said “the licence fees have been paid at the prescribed regulated rates and the spectrum licences have been issued to WBS”.

Contravention of the Act
In February last year the Mail & Guardian reported how Lebooa had been hijacked, beaten and had his life and those of his family threatened. He claimed his assailants said the attack was to persuade him to drop his case against WBS, who denied any involvement.

In this week’s exit report, the councillor said he still feared for his and his family’s lives.

When inspectors seized equipment from WBS last year, the regulator placed a moratorium on all seizures and closures of illegal operators and their operations, which remains in effect.

“This resolution is against the Act and interferes with the legislative work and functions of the inspectors,” Lebooa’s report said. “I urge Parliament to reverse this illegal, misconceived and irresponsible moratorium immediately.”

Maleka, however, said: “Due to several court interdicts [including WBS and Amatole] against Icasa, the council imposed a moratorium on search and seizures to ensure a proper process that does not prejudice the licensee or end users. It is important to note that seizures are a mechanism of last resort, when all other processes have failed to ensure compliance. However, the moratorium did not deter inspectors from continuing with their respective duties as per [the] Icasa mandate.”

Council is illegally constituted
Lebooa’s exit report explained how Communications Minister Faith Muthambi dismissed him and three other Icasa councillors before the constitutional expiry of their terms. The councillors would have officially left in January or February next year, as the law allows for 45 additional days following the expiry of their terms, but Muthambi ordered they leave on October 31. In doing so, she violated the provision of the Icasa Act, the report said. Lebooa questioned the reasons behind this and urged Parliament to review this action.

The Democratic Alliance has previously said the minister’s action in this regard was unlawful. And DA spokesperson for communications Marian Shinn said the worry now was that the positions have not yet been filled, despite the fact that the council is required by law to consist of nine councillors. “As far as I’m concerned it’s illegally constituted at this stage,” Shinn said.

In response to questions, the spokesperson for the department of communications, Ayanda Hollow, said the council is fully constituted and insisted the councillors were never dismissed – it was the end of their term in office. 

Economic week ahead: A slew of SA data

South Africa
The South African Reserve Bank will release its latest quarterly bulletin – including third quarter current account data – on Monday. The median forecast of 13-economists recently surveyed by Bloomberg is that South Africa’s current account deficit narrowed to 5.8% of gross domestic product (GDP) in the third quarter from 6.2% in the second. 

South Africa’s October mining and manufacturing figures will follow from Statistics South Africa (Stats SA) on Tuesday. Consensus is that industrial output slowed to 2.0% monthly growth in October from 4.0% in September.

November’s consumer price index (CPI) and October’s retail sales data will take centre stage on Wednesday. Stats SA’s report may show that South Africa’s consumer inflation rate slowed to 5.8% in November from 5.9% in October. 

November’s producer price index (PPI) will headline Thursday’s choc-a-bloc data docket, which includes October’s civil cases for debt, wholesale trade and building statistics along with third quarter employment statistics, amongst others.  PPI – a measure of price rises at the factory gate – may show a 6.5% increase from a year earlier, down from 6.7% in September. 

United States
Tuesday’s job openings and labour turnover survey (JOLTS) report is the first significant release on America’s economic calendar this week. Consensus is that the report will show that there were 4.790-million job openings on the last business day of October, up from 4.735-million in September.   Later in the day, attention will turn to October’s wholesale inventories count. Inventories likely rose 0.2%, down slightly from September’s 0.3% growth.

On Wednesday, the U.S Treasury’s monthly budget report may show a $63.0-billion deficit for November, down from $135.2-billion in November of 2014. For the past 10 years, November’s deficit has averaged $115.2-billion. 

Next up, on Thursday, economists and investors will focus on last month’s retail sales and import and export price reports along with October’s business inventories update. Consensus is that retail sales ticked-up 0.4% from October to November. Less auto sales, the figure is likely to be a more modest 0.1% monthly increase. 

Closing out the week on Friday, the Reuters/University of Michigan’s preliminary consumer confidence index for December is likely to rise to its highest level in more than seven-years. Americans’ sentiments towards the state of the world’s largest economy have been on the rise as petrol prices fall, stock prices climb and the country’s labour market continues to improve. 

Euro zone finance ministers will gather in Brussels on Monday to discuss their budgets for 2015. A possible extension of Greece’s bailout programme and what, if anything, to do about countries in the currency bloc that miss their deficit reduction targets are expected to dominate the discussions. 

Monday will also bring updates from the European Central Bank (ECB) on the activities of its asset purchase programme, from Germany on industrial output, and from France on business sentiment. Economists expect Germany – Europe’s largest economy – to report industrial output growth of between 0.3% and 0.5% for October, down from a 1.4% monthly gain in September.  

On Tuesday, markets will turn their attention to Germany’s latest trade data and the United Kingdom’s October industrial production figures. Consensus is that Germany’s trade surplus narrowed to €19.0-billion in October from €21.9-billion in September and that the UK’s industrial output climbed 0.2%, month-on-month.

The UK’s October trade figures will follow on Wednesday along with Ukraine’s third quarter growth figures. Ukraine’s Prime Minister, Arseniy Yatsenyuk, said late last month that he expects the embattled country’s real gross domestic product (GDP) to shrink 7.0% in 2014.  On Thursday, Germany and France – Europe’s two largest economies – will release last month’s consumer inflation figures. Inflation likely remained essentially flat in both countries, highlighting the continuing risk of deflation faced by the wider euro zone economy.

On Friday, ratings agencies Fitch and Standard & Poor’s will publish updated ratings of the United Kingdom. Both companies are widely expected to leave their top-notch ratings of the country unchanged. 

China released last month’s trade figures on Monday. Exports rose 4.7% from a year earlier, down from an 11.6% increase in October and well below consensus expectations for an 8.2% rise in November. Imports fell 6.7% from a year earlier, leaving thee world’s number two economy with a $54.5-billion surplus for the month.

China will provide consumer and producer price inflation updates on Wednesday. Economists expect this week’s data to show that the country’s consumer price index (CPI) rose 1.6% from a year earlier in November. Prices at the factory gate, however, probably continued to fall last month. Consensus is that China’s producer price index (PPI) fell 2.4%, year-on-year.

Wednesday will also bring China’s latest aggregate financing and money supply data. Aggregate financing probably climbed following a rate cut and further monetary policy easing last month. Consensus is that aggregate financing climbed to 890-billion renminbi from 663-billion in October. 

New yuan lending may have increased as well, though by a much lower amount. Money supply may have increased 12.5% from a year earlier.  On Friday, China will release retail sales, industrial production, and urban fixed income investment data. Industrial production climbed 7.7% in October and likely expanded at roughly the same rate last month. Retail sales likely climbed 11.5% from a year earlier.

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