PRESENTATION ON DEVELOPMENTS AND PROGRESS REGARDING OPERATIONS, GOVERNANCE AND FINANCIALS OF THE...

PRESENTATIONON DEVELOPMENTS AND PROGRESS

REGARDING OPERATIONS, GOVERNANCE AND FINANCIALS OF THE

NAMAKWALAND DIAMOND FUND TRUST10 AUGUST 2011

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Introduction & background

Summary of developments and progress regarding

operations, governance and financials

Time line of interactions with Portfolio Committee

on Mining, and related outcomes

Concluding comments

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INTRODUCTION & BACKGROUND

The overall purpose of existence of the NDFT has always been, and still is, to ‘improve the quality of life of the inhabitants in its beneficiary areas, by

enhancing their social, cultural, and economic well-being’

Vision & Mission


To this end, the NFDT has over the past 16 years added substantial value across a spectrum of individuals, groupings and projects, including:

• Financial assistance in the form of bursaries to thousands of tertiary learners and secondary pupils;

• Educational infrastructure and skills development projects;• Charitable contributions to thousands of beneficiaries, for

aspects such as funeral assistance, rehabilitation, HIV treatment, old age homes, hospital care and orphanages (rendering financial assistance in terms of operational costs);

• Support in times of disaster such as financial assistance to farmers during periods of drought;

• Entrepreneurial opportunities and education in basic trades for instance.

The radical impact of the cessation of royalty payments to the NDFT is evident –

The reality is simply this: That the original purpose and intent of the Founder – i.e. for the Trust to serve as a catalyst for need

fulfilment among the previously disadvantaged rural communities of Namakwaland – would effectively be negated

Without its income stream, the Trust cannot support learners (and by implication the leaders of tomorrow); the elderly and

destitute will not able to reckon on any support from the Trust, as would HIV sufferers, the disabled, the sickly and the

impoverished

In the absence of royalties, ‘Achieving its vision’ and ‘living its mission’ would become impossible – and the Trust would be

relegated systematically : From ‘change agent’ to ‘relic’

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INTERACTION WITH PORTFOLIO COMMITTEE ON MINING, AND RELATED OUTCOMES

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SUMMARY OF DEVELOPMENTS AND PROGRESS REGARDING OPERATIONS, GOVERNANCE AND FINANCIALS


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Following the filing of required documentation, Mr HJ Visser was officially registered as a Trustee of the NDFT – Reference Master’s Certificate dated 14 February 2011 – and duly assumed duties on 1 March 2011.

The Trust sadly noted the passing of Mr Visser during May 2011 and the Master has been informed accordingly.

REGISTRATION OF HJ VISSER AS TRUSTEE

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ANALYSIS OF PROCEDURES AND EFFECTIVENESS

As reported to the Portfolio Committee in February 2011, the legal advisors of the NDFT (Edward Nathan Sonnenbergs – ENS) had been requested to advise on the most appropriate modus operandi for investigating the processes and procedures in operation at the Trust

ENS submitted an outline – detailing 3 possible avenues for doing the analysis – on 12 April 2011

At a Special Board Meeting of 15 April 2011, the NDFT passed resolutions for the analysis (as per the third method proposed) to be conducted and reported on by the Trust’s professional advisors LDP, ENS and Sterling; and for an advisor to be appointed in order to table particular recommendations based on the reports thus received

The analysis as mandated has commenced, and the first report is expected at the end of August 2011


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ANALYSIS OF TRUST DEED

Analysis of the Deed of Trust, with regard to –

Aims of the TrustPrescribed procedures (pertaining to Trustees)Compliance with Deed of TrustTrustee meetingsTrustees’ dutiesAssumption of TrusteesTermination of Trustee appointmentsRecommended amendmentsTrustees’ Code of ConductFinancial Statements of the TrustExpenses and remuneration of Trustees and Employees respectivelyTrust Property Control ActIncome Tax ActLegal opinions by ENS


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Analysis of decision making processes, with regard to –

The Operational PolicyThe Human Resources PolicyAllocation of grants to beneficiariesFrequency of meetingsAttendance of meetingsDuration of meetingsImplementation of decisionsConsequent and related expenditureMinutes of Board and Committee meetingsRole of Executive CommitteeRole of Sub Committees

ANALYSIS OF DECISION MAKING PROCESSES

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INTERVIEWS WITH STAFF

Interviews with staff to –

Seek additional information and clarification, where required

Verify assumptions Corroborate provisional findings Check and cross-reference perceptions

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REMUNERATION ANALYSIS

Remuneration analysis to –

Benchmark and compare with similar institutions Correlate internal and external equity of pay practices

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REPORTING

Final stage of the analysis involves –

A written report comprising findings, conclusions and recommendations

Presentation to and interaction of Trustees with professional advisors about recommended changes and optional plans for implementation

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INTRODUCTION OF COST SAVING MEASURES

It need to be noted that -

The NDFT did not waste any time in implementing cost savings measures, and in fact keeps a very close eye on all aspects related to financial expenditure;

However, the Trust is awaiting a written report from its professional advisors about recommended changes and optional plans for implementation;

Upon the receipt of the report - detailing findings, conclusions and recommendations - the NDFT would most definitely institute further cost saving measures, as and when required and upon taking appropriate advice.


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CUT BACK ON TRUSTEE EXPENSES

Cut back on Trustee expenses effected in two areas -

Reduction in transport allowance from R7-20 to R5-00 (before tax) per/km as from 1 August 2011

Reduction in attendance fees from R3334-00 to R1662-00 per day as from 1 January 2012

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REDUCTION OF OPERATIONAL OVERHEADS

Reduction of operational overheads by -

Strict monitoring of telephone calls (and duration); limited calls to cell phones; elimination of unnecessary printing, photo copying etc.

Special consideration of tele-communications system which would facilitate drastic cost savings in the longer term

Weekly control of budget and closure of the feedback loop

The current admin budget of R10.5 million, compares well with the 2010 figure of R14.6 million.

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BUDGETARY REVISIONS

Over and above the introduction of strict budgetary control measures and pre-emptive variation reporting, elimination of the following line items have brought about bottom line

savings (as per recent Board Resolutions) -

Elimination of social development allocation of R110000-00 Savings on Management Fund of R73000-00

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SELL OFF OF ASSETS

The recent sell-off of under-utilised vehicles will effect a longer term cost saving in terms of finance, running and maintenance

costs

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TERMINATION OF VENDOR AGREEMENTS

The Trust has commenced with a reconsideration of all standing service agreements with a range of vendors, and in a number of

instances - where feasible and practicable – negotiations are underway to facilitate cut backs and/or termination of service level

agreements with selected vendors

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TRUSTEE TRAINING

During July 2011 a Training Workshop was held with the Board of Trustees and Staff Members, during which the following issues

were discussed and clarified:

The implication of the Trust Deed on roles, responsibilities, rights and obligations of all stakeholdersThe nature and scope of Trustees ‘discretion’Amendments to the Trust Deed and the impact of these on the Trust’s strategy and operationsAlignment of the Trust’s Operational Policy with the Trust Deed

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AREA VISITATIONS

In keeping with its annual communications roll-out to its beneficiary areas, NDFT representatives concluded public

meetings with constituent representatives across Namakwaland.

These meetings were utilised to brief and update beneficiaries as to the current state of affairs related to the business of the Trust, and aspects such as changes to the Trust’s financial position (in view of the suspension of royalty payments), its interaction with the Portfolio Committee, and the impact this would have on the

meeting of expectations, were tabled and discussed.

The respective communities were unanimous in their call upon the Trust to persist in its endeavours towards procuring royalties, so that poverty stricken families may be assisted and supported, as in the past; in this, the Trust was mandated to do everything in its power in order to facilitate the reinstatement of royalty payments.

AREA VISITATIONS

Meetings were held in the following areas:

NO AREA NO OF ATTENDEES DATE

1 SANDDRIFT 27 13 NOVEMBER 2010

2 LEKKERSING 70 14 NOVEMBER 2010

3 CONCORDIA 135 18 NOVEMBER 2010

4 BUFFELSRIVIER 32 07 NOVEMBER 2010

5 KOMAGGAS 64 07 NOVEMBER 2010

6 KUBOES 30 13 NOVEMBER 2010

7 EKSTEENFONTEIN 42 14 NOVEMBER 2010

8 STEINKOPF 57 15 NOVEMBER 2010

9 PELLA 43 12 FEBRUARY2011

10 LELIEFONTEIN – OOS 34 19 FEBRUARY 2011

11 LELIEFONTEIN – WES 80 20 FEBRUARY 2011

CONCLUDING COMMENTS

The the Board of Trustees and the staff of the NDFT are well aware of the serious implications brought about by the suspension of royalty payments and the fact that the usual operation of the Trust as a change agent has been severely curtailed.

In response, all stakeholders are unanimous in their quest to lessen the dire consequences of this as far as possible, and staff as well as Trustees in particular have introduced preliminary cost saving measures. When the analysis of processes and procedures as outlined highlight further areas for improvement, these would be acted upon without hesitation, thereby also effecting cost savings.

It stands to reason though, that cost savings and effectiveness improvement measures can only steady the ship – one which would inevitably succumb should royalties not be reinstated. The NDFT remains steadfast in its resolve to work towards this with every means at its disposal and acquit itself of the accountability it received in terms of the Deed of Trust in 1994 – i.e. to promote the advancement, empowerment and upliftment of the rural communities of Namakwaland.

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PRESENTATION ON DEVELOPMENTS AND PROGRESS REGARDING OPERATIONS, GOVERNANCE AND FINANCIALS OF THE...

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