The Justice Administered Fund Bill

Arvitha | Jan 19, 2016
This Brief discusses the Justice Administered Fund Bill
 

Introduction

The object of the Justice Administered Fund Bill is to establish the Justice Administered Fund to provide for the management, control, investment and utilisation of money in the Fund.This Bill has been passed by Parliament and will come into effect as soon as the President signs it into operation. The explanatory note appeared in Government Gazette No. 39289 of 14 October 2015. This Bill was prepared in close conjunction with the National Treasury and has no implications for the Provinces or any financial implications for the State.

Description of the Bill

This Bill establishes a fund to be known as the Justice Administered Fund. Section 3 sets out the financial matters to be administered through the fund on behalf of third parties.  They are:
  • Money which is received in terms of maintenance orders
  • Money received as bail payable in terms of the Criminal Procedure Act.
  • Money paid in Court in terms of any rule of court or any other law of which the intended beneficiary is a third party
  • Money received which does not fall into the allocated listed categories
  • Interest earned or bank charges on money paid into or retained by the Fund.
 
In terms of Section 4 the Director–General of the Department of Justice is accountable for the Fund in terms of the Public Finance Management Act.
 
In terms of Section 5 the accounting officer within the Fund must open and maintain bank accounts and clearly name and identify such accounts, with a separate account known as the reserve account.
 
Section 7 of the Public Finance Management Act No. 1 of 1999 (PFMA) which deals with banking, cash management and investment framework applies with necessary changes to the accounts of Section 5.  This section requires that any money which is unclaimed or cannot be allocated into categories due to beneficiaries must within 30 (thirty) days after receipt be paid into the reserve account.
 
Section 5 also states that, if a beneficiary whose amount has been deposited into the reserve account claims it within ten years after it has been paid into the reserve account, the reserve account will be debited and the amount correctly allocated.
 
Section 6 deals with the utilisation of the money in the Fund. This section states that the money in the Fund may only be used for the purposes for which it is deposited into the Fund. It further states that it must be paid directly from the Fund to the party entitled to the payment in question.
 
Section 7 deals with the investment of money which is not immediately required. Any money in the Fund which is not required for immediate use may be invested with a financial institution approved by the Minister of Finance and may be withdrawn when required.
 
Section 8 states that the Minister may make regulations in consultation with the Minister of Finance.
 
Section 9 deals with Financial Instructions and authorises the accounting officer in consultation with the National Treasury to issue financial instructions which are not in conflict with this Act, Public Finance Management Act and any regulations.

Analysis: checks and balances within the Bill

This Bill is a step forward.  It establishes an administrative fund established to deal with finances on behalf of third parties and monitors deposits.  It contains measures to avoid maladministration of the fund, which is important to avoid embezzlement. 
 
Section 7 of the PFMA requires accountability from the Director-General who is in charge of this Fund.The PFMA deals with the banking, cash management and investment framework and states that any institution or public department may not open any bank accounts without the written approval from National Treasury. Section 7 of this Act gives National Treasury the power of oversight of this Fund.
 
Section 6 is an administrative function to ensure that the money in the fund is used for the purpose it was meant and not mal-administered and this itself is a check on its own.
 
Section 7 allows for investment of the monies in order to receive a return on that investment but again it has a check in place being that the Minister has to approve the investment and has to approve the withdrawal when necessary.

Conclusion

The Bill is progressive and was developed with good intentions. The problem as with all funds of this kind is the administration and internal checks of such Funds. The key is to avoid corruption and maladministration.  The Bill aims to achieve sound administration, and we hope that this will be delivered in practice.

 

Arvitha Doodnath
Legal Researcher
arvitha@hsf.org.za