By: Gary Pienaar

Parliament has published a statement on its website denying it was responsible for the recent publication of a notice in the Government Gazette indicating an intention to end all efforts by liquidators to recover Travelgate debts from MPs. The notice was supposedly placed by the liquidators of the Bathong Travel agency.

However, given Parliament’s proposed commitments in the notice, it is inconceivable that Parliament was unaware of it in advance.

Various reports have interpreted the notice to mean Travelgate MPs will no longer be required to repay Parliament and other creditors sums totalling about R6m. Parliament has not commented on this possibility.

The notice indicates that Bathong’s creditors will be asked to agree to instruct Bathong’s liquidators to stop all legal action, including litigation, against MPs.

The notice clearly envisages the possibility that those MPs, who have defended or are defending criminal or civil claims, such as Mnyamezile Booi, may ask the courts to order their costs of doing so be refunded by the liquidators. The notice undertakes that Parliament will indemnify the liquidators who may face such orders.

According to Parliament’s 2006-07 annual report, Bathong’s liquidation proceedings alone are expected to recover about R3,6m owing to Parliament itself. The annual report also indicates that MPs’ debts have been assessed and validated, and close on R3m has already recovered. It is hard to understand why, then, the notice proposes to halt this debt recovery process.

What has changed? Parliament’s decision is apparently based on legal advice that suggests that the difficulty and cost of recovery of amounts owed will be greater than the sums themselves.

The cessation of liquidation proceedings is still subject to the agreement of other creditors, although Parliament is by far the largest creditor and its view will, therefore, carry significant weight. This is especially so if Parliament also undertakes to pay other creditors any debts MPs still owe them.

However, a recent creditors’ meeting was halted by a court challenge by two other creditors, who argue the resolution is not in the spirit of the companies or insolvency acts, is not in the interests of all creditors, and prejudices their rights to continue successful efforts at repayment from MPs.

What is unclear is whether Parliament intends to write off MPs’ debts entirely or merely bring its debt recovery exercise in-house. This second possibility is not excluded by terms of the notice, which ostensibly aims only to bring an end to the methodology of using outside liquidators. A representative for the liquidators has said, rather cryptically, the total R6m debt is being “passed on to Parliament” and he “hopes” Parliament will recover the outstanding debt.

However, one wonders why the Gazette notice allows for Parliament to compensate other creditors if legal advice indicates liquidators’ evidence is supposedly so weak. Why would Parliament essentially throw good money after bad? Similarly, if the Gazette notice signals only a change in debt recovery strategy, why has Parliament not simply said so? Why its silence on the issue until the media picked up on the notice, and why Parliament’s subsequent failure to explain? The Travelgate fraud is, after all, a matter of great public interest and concern.

In terms of the Public Finance Management Act, Parliament is obliged to take all reasonable steps to recover any outstanding debt. While what is “reasonable” depends also on the cost of recovering debts, in the case of public representatives, other considerations are unarguably of even greater importance.

Chief among these is the need to build public confidence in the integrity of the institution that represents them, and purports to exercise oversight over the government for them. Such responsibilities clearly require of both it and its individual members the highest level of integrity.

Consequently, a solely cost-based rationale for halting liquidators’ activities and a simultaneous failure by Parliament to publicly undertake concerted steps itself to secure reimbursement by delinquent MPs would be a serious misjudgment.

The constitution prescribes the values of transparency, accountability and openness in the conduct of Parliament’s functions. Senior party leaders have previously given undertakings that decisive action will be taken against any MP found guilty of corruption. These assurances were significant, given that the constitution provides for a relatively narrow set of grounds for removal of MPs.

The intervention of the courts to resolve this dispute is timely and necessary — and something of a relief, given Parliament’s continued inconsistent and unenthusiastic handling of Travelgate.

As the arms deal was a litmus test for SA’s democracy, so Travelgate remains the litmus test for Parliament as an institution.

First published in the Business Day Monday, 2nd June 2003.