Ruling on DG’s policy influence
THE Constitutional Court is to make a ruling that has implications for how much the state’s directors-general can influence major fiscal policy decisions.
Prodiba, a company that supplies credit-card-sized drivers’ licences to the Department of Transport, said in its application to the Constitutional Court that the Supreme Court of Appeal (SCA) had erred in holding that a DG’s authority to award the multimillion-rand contract was subject to an additional legal requirement of cabinet authorisation or ministerial approval.
Prodiba wants leave to appeal the March SCA judgment that declared that an extension of the drivers’ licence contract signed by then DG George Mahlalela in February 2013 for another five years was invalid.
The financial implications for the new contract were about R1.1billion. Mahlalela signed the agreement in the final month of his term at the department.
In the application filed last month, Prodiba said the SCA’s decision was at odds with the Public Finance Management Act (PFMA), which issued general authority to contract to an accounting officer with no provision limiting this authority at all.
In 1997, the department awarded a tender to Prodiba to produce licences for five years. The contract was repeatedly extended and the last extension was to February 29 2014.
The agreement Mahlalela signed meant the migration from the initial card system to a smart card microchip-based driving licence system would be performed by Prodiba.
This was in contrast to the stance taken by the department in October 2012 that it would undertake the entire production process in-house.
In April 2013, the department cancelled the agreement, which was opposed by Prodiba. The department alleged that Mahlalela was “on a frolic of his own” when he signed the contract.
In September 2013, the High Court in Pretoria set aside the department’s decision. It held that there was no provision in the PFMA requiring Mahlalela to obtain the minister’s approval before binding the department by concluding the agreement.
However, the SCA held in March that policy decisions such as those to migrate to a new drivers’ licence system, which had significant fiscal implications, fell within the authority of the legislature or the executive.
Prodiba’s director André Appelgryn said it was not in dispute that Mahlalela was the directorgeneral at all relevant times until the expiry of his contract on February 28 2013 and had the requisite statutory authority to conclude the agreement on behalf of the department.
“Nothing in the Constitution, the PFMA or the Treasury regulations prescribes that further approval by cabinet or the minister is required for an accounting officer to conclude a contract on behalf of a department.”
The department said it would comment next week. —