COMMISSION FOR CONCILIATION, MEDIATION AND ARBITRATION

ARBITRATION AWARD

Commissioner: J. HIEMSTRA

Case No.:  GA51345

Dates of hearing: 8 & 9 July 1999

  6 - 9 September 1999

  25 - 29 October 1999

  8 November 1999

Written Heads of Argument: 8 & 17 November 1999

Date of award: 26 November 1999

In the arbitration between:

PUBLIC SERVANTS ASSOCIATION OF SA (on behalf of J. SCHLEBUSCH and C. BRÜCKNER)  Employee party

and

DEPARTMENT OF HEALTH - Employer party

Employee's representative: Mr G. Higgins

Employee's address: c/o SAMPSON OKES HIGGINS INC.

Employer's representative: Adv F. Saint

Employer's address: Private Bag X828

  Pretoria

  0001

DETAILS OF THE HEARING AND REPRESENTATION

The hearing was conducted in Pretoria in a boardroom provided by the Employer, the Department of Health, over12 days, namely 8 & 9 July 1999, 6 - 9 September 1999, 25 - 29 October 1999 and 8 November 1999. The employees, Professor J. Schlebusch and Miss C. Brückner, were represented by Mr G. Higgins, an attorney from the firm Sampson Okes Higgins, and the Department of Health was represented by Adv F. Saint, instructed by the State Attorney.

ISSUE TO BE DECIDED

The dispute between the parties concerns alleged unfair conduct relating to demotion as envisaged by Item 2(1)(b) of Schedule 7 to the Labour Relations Act, No. 66 of 1995.

BACKGROUND TO THE ISSUE

Schlebusch was employed by the Department of Health as Director: Medicines Registration, while Brückner was employed as Deputy-Director: Medicines Registration. In addition, Schlebusch held the position of Registrar of the Medicines Control Council (MCC), a statutory appointment in terms of section 12 of the Medicines and Related Substances Control Act, No. 101 of 1965.

Schlebusch has been employed in the Department of Health since 1972. In September 1984 he was appointed Director: Medicines Registration, and in 1993 as Registrar of the MCC. As Registrar he was responsible for the supplying of secretarial services to the MCC as well as administrative and technical support to the MCC and its 13 expert committees.

Brückner had been employed by the Department of Health for 24 years.

According to evidence by the former chairman of the MCC, Prof Peter Folb, and also Schlebusch, the South African regulatory authority had, during the tenure of Schlebusch as Registrar, been highly regarded internationally and had been appointed by the World Health Organisation (WHO) as a Reference Centre for the training of regulators of other countries. South Africa was a member of the International Conference for Drug Regulatory Authorities and one of 12 member states of the Southern and Eastern African Medicine Regulatory Conference (SEAMRAC), and the driving force behind that movement.

In January 1998, the Minister of Health requested a team consisting of four members independent of the drug regulatory system in South Africa and three representatives of the Department of Health and the Ministry, to review the existing process for the regulation of medicines in South Africa and to make recommendations on this and a number of related issues. Although it was stated in evidence that there was no official leader of the team, the de facto team leaders were Prof Graham Dukes, Emeritus Professor of Drug Policy Studies at the University of Groningen (The Netherlands), an expert in drug policy of considerable international repute, and Dr Suzanne Hill, a Research Academic in Clinical Pharmacology at the University of Newcastle, NSW, Australia.

The Review Team submitted its report to the Minister of Health on 24 March 1998.

On 24 March 1998, the day of the release of the Review Team's report, Schlebusch and Brückner were told to report to the office of the Director-General. They were not told what the meeting was about. Present at the meeting were the Director-General, Dr Shisana, the Deputy Director-General, Dr Ntsaluba, the Acting Deputy Director-General, Dr Mtshali, the Director: Personnel Administration, Mr Groenewald, and the Chief Legal Officer, Mr Ramasala. They were told of the outcome to the Review Team's investigation, whereafter Brückner was asked to leave the room. Schlebusch was then handed a letter addressed to him by the Director-General, Dr Shisana It is necessary to quote the full text of this letter as it deals with all the pertinent issues that were raised in this arbitration:

Dear Prof Schlebusch

The Report of the Medicines Regulatory Task Team is complete and has been presented to the Minister. A detailed aspect of the report which pertains to yourself as manager was not included in the main report but has been communicated separately to the Minister for what, I trust you will agree, are obvious reasons.

In this regard, the report concludes that "the process of reform will be facilitated if some persons who are very closely identified with the present system are released to undertake other tasks in the health sector." (p.14.) This refers to yourself and one other person.

We are informed that this recommendation by the Review Team was, like all others in the report, a unanimous one from the Team, and followed extensive discussion. "Anyone unfamiliar with the details could all too readily conclude that these persons are essentially responsible for all the problems currently facing the regulation of medicines. That is not the case; as the analysis shows, the causes of the deficiencies in the existing system are many, and it could be argued that the individuals concerned have worked hard, according to the dictates of their own conscience, and sometimes under difficult conditions, to serve the system established by law in 1965", says the supplementary communication to the Minister.

The rest of the communication to the Minister goes on:

"The first and most fundamental reason to conclude that these individuals cannot remain in place within the Directorate is naturally that, in the restructured organization presented in the Review Team's report, their present positions no longer exist. Tasks are redistributed and new and quite different functions are created.

"This then raises the question as to whether these persons might reasonably be expected to be suitable for any posts to be created in the new organization. The Review Team has to conclude that this is not the case; the reasons for this are presented below.

"The Team is recommending structural and managerial changes of various types which will demand both adaptability and a creative input from senior staff. The changes are specific to the drug regulatory situation but are fully consistent with the transformation process. In the case of the persons concerned, the Review Team is frankly of the opinion that they represent a very conservative and inflexible approach both to management in general and to the problems of drug regulation and personnel supervision in particular. The individuals would be expected at the very least to experience great difficulty in adapting to fundamental change. The Team therefore believes that their presence would essentially obstruct developments which are urgently needed.

"At the level of personnel management, the persons concerned must be considered to lack insight to a serious degree. The Review Team notes the numerous and specific complaints raised against them by various of their subordinates, and the extent to which up to the present valuable staff have been lost to the organization primarily for this reason, thus compounding existing problems of workload. Attitudes to subordinates tend in some cases to involve a degree of favouritism. Less favoured subordinates may be treated in an off-hand or unsympathetic manner; normal routines with respect to personnel appraisals are not always respected, and reasonable and timely requests for leave may be rejected without reason.

"The Review Team finds that some members of current management appear to lack the insight, experience and general ability to institute and direct the operation of what is essentially a complex and very specialized secretariat. Three examples of this situation may be given:

"a. The secretariat has a massive task in terms of information flow and processing, as evidenced by the entirely impractical situation in which members of the MCC and of Committees receive quantities of paper far in excess of what they can reasonably be expected to assimilate, most of it being extraneous to their needs. It is entirely true that within recent months the Directorate developed a plan for investment to "computerize" this material by scanning it and transferring it electronically to recipients; however, investment in such an electronic system would merely transfer the present inefficient system from paper to the screen. The above case illustrates particularly a failure to take a broad view and an integrated approach to management, applying instead a partial ad hoc approach which solves nothing. What is first needed is an analysis to lay the basis for reorganization and streamlining of the information flow. This would substantially reduce expenses and assist in improving the effectiveness of ongoing work.

b. Any secretariat of this type has an intensive yet delicate ongoing relationship with the outside world, particularly with manufacturers of medicines. It must be perceived as fair, helpful and efficient. The Review Team has accepted evidence that the present Directorate has variously favoured certain applicants and left others much dissatisfied, that it has been unhelpful when dealing with reasonable enquiries, and that it does not work as efficiently and consistently as applicants and the Council are entitled to expect.

c. The day-to-day administration is not transparent and as a result it is either difficult or impossible to obtain concrete information on status. Such overviews are needed by a Council, by the secretariat itself in order to monitor its work, and by the outside world. The Review Team has experienced the problem at first hand; it is however difficult to be sure whether one's inability to obtain information on a particular matter is solely due to administrative failure, or also to a degree of resistance to intrusion."

The Review Teams's (sic) recommendation are (sic) seen to have been made in good faith. You might feel that you need an opportunity to defend yourself against the views expressed by the Review Team. However, you should be reminded that this is not a disciplinary enquiry, but a finding by a team of experts who were asked to find ways of improving medicines regulation in the country. In accepting the Review Team's recommendation with regard to your position, we are not passing a verdict of "guilty" as such. To be able to do that, a lengthy investigation would have to be undertaken which would not prove beneficial to any of the parties concerned. It would, in particular, be quite disruptive to the very processes that we sought to improve through the review.

It is for this reason that I request you to take the severance package that you requested last year. It was approved by the Minister on 29 April 1997, and was communicated to the Director: Administration.

Your contribution through your long service to the department will not go unnoticed, and I would like to take this opportunity to thank you sincerely for your contribution.

(signed)

DIRECTOR GENERAL: HEALTH

DATE: 24/3/98

Dr Shisana told Schlebusch that if he did not take the severance package mentioned in the letter, he would be suspended immediately and he would be charged with misconduct. The suspension could be with or without emoluments. She further said that if he was found guilty he could be dismissed and lose much more than what was offered in the severance package. Dr Shisana pressed him for an immediate answer, but he said that he needed time to think, and to consult a lawyer or an official of his staff association. This was refused and the Acting Deputy Director-General, Dr Mtshali, started to formulate an agreement and instructed the Chief Legal Officer, Mr Ramasala, to record it. After much debate, Schlebusch agreed to sign an agreement which essentially gave him two days to consider his options.

Thereafter Mr Bada Pharasi, a Chief Director, and Schlebusch's immediate superior, entered and escorted Schlebusch to his office where he was allowed to take only his briefcase. He was told to surrender his office and other keys, his entry card, his computer and his cellphone.

Brückner was then called in and essentially the same happened to her. She received an identical letter to Schlebusch, except that she was offered a severance package whereas Schlebusch was requested to take a package he had previously applied for.

Staff at the Directorate were instructed not to communicate with Schlebusch or Brückner and instructions were given for all the hard drives on computers throughout the Directorate to be copied. Guards were placed in the passage outside Schlebusch's secretary's office and the locks to his office were changed.

On 22 April 1998, the then Minister of Health, Dr Zuma, wrote to Schlebusch, terminating his statutory appointment as Registrar of Medicines with immediate effect.

It must be noted here that the new structures for medicines regulation proposed by the Review Team have, more than one and a half years later, still not been implemented. The only aspect of the report that has been implemented is the removal from office of Schlebusch and Brückner.

After intervention of the attorneys for Schlebusch and Brückner, they were by agreement reinstated about 5 ½ months later in different positions in the Department of Health at the salaries and benefits that applied at the time of their removal. The new positions were specially created for them. Dr J.H. Pretorius, the Deputy Director-General, stated in evidence that the new positions were of similar status and importance. It was, however, conclusively shown in cross-examination that the positions were far inferior and that Schlebusch and Brückner had merely been temporarily accommodated. It was never seriously contended on behalf of the Department that the positions were in fact of equal status and importance.

The applicants' attorneys made persistent attempts to obtain a copy of the supplementary report referred to in the letters to Schlebusch and Brückner, to no avail. A dispute was referred to the CCMA by the Public Servants Association on behalf of Schlebusch and Brückner regarding the refusal by the Department to disclose information in accordance with section 16(2) of the Labour Relations Act. In response thereto the Director-General wrote the following to the National Director of the CCMA:

"The point of contention in the above mentioned dispute revolves around the parties (sic) interpretation of section 16(5)(c) of the Labour Relations Act, No. 66 of 1995 which states the following:

-1. The employer is not required to disclose information that is confidential and, if disclosed may cause substantial harm to an employee of the employer.

The Department is of the view that it provided the two officials with all the relevant information as contained in a ‘supplementary report' with regards to themselves and remains of the opinion that the rest of the information requested by the two officials is privileged."

(The date of this letter is illegible.)

In a letter to the applicants' attorneys, dated 8 May 1998, the Special Advisor to the Minister of Health, in refusing to disclose the supplementary report, said the following:

"On careful consideration, it has been established that all the contents of the confidential letter, insofar as they relate to your clients, have been given to them, quoted verbatim in letters written to them on the 24 March 1998. The remainder of the contents of the letter are totally unrelated to your clients and bear no reference to them. Releasing the confidential letter to you or your clients may amount to a breach of confidentiality in respect of other parties, as you are well aware. In the circumstances, the letter will not be made available to your clients."

The application for disclosure of information was eventually abandoned, and instead, the Minister of Health was subpoenaed to appear before the CCMA and to produce the document. Despite the subpoena neither the Minister, nor a representative of her office, were present on the first day of the arbitration. It was contended on behalf of the Minister and the Department that the nature of the document sought was unknown to them, that the wording of the subpoena was too vague to identify the document and, in any event, that it will take time to locate it.

The supplementary report was eventually produced on 6 September 1999, and only after I had issued a stern warning to the Department in this regard. A perusal of this report reveals that the protestations of privilege, confidentiality and potential harm to other persons, as set out in the correspondence quoted above, were simply untrue. Almost the entire report is quoted in the letters to Schlebusch and Brückner of 24 March 1998. There is no reference to other persons. The reason for refusing to disclose the document, namely that it is confidential in relation to other parties, is therefore without substance and the Department's reluctance to disclose the document is inexplicable.

SURVEY OF THE ARGUMENT AND EVIDENCE

I shall first deal with the report and supplementary report of the Review Team and issues arising therefrom. Thereafter I shall deal more specifically with the evidence of the witnesses who testified at the arbitration.

The terms of reference of the Review Team were finalised on 20 January 1998 and it completed its task on 24 March 1998. Its working method was to consult a large volume of documents relating to medicines regulation in South Africa and written submissions from interested parties. They also interviewed persons associated with the medicines regulatory system in South Africa, including employees of the secretariat of the Medicines Control Council (MCC) and the Department of Health as well as members of the MCC. The team attended one meeting of the MCC as observers.

Professor Peter Folb, who had been the chairman of the MCC, and whose appointment as such was terminated simultaneously with the suspension of Schlebusch and Brückner, submitted a comprehensive response to the Review Team's report to the Minister of Health on 2 May 1998. At the Arbitration, Folb also gave evidence in support of Schlebusch and Brückner. Folb is an internationally renowned specialist in medicines regulation and has an impressive curriculum vitae. Amongst other international portfolios, he is the Director of the World Health Organisation Collaborating Centre for Drug Policy. He was commissioned by the World Bank and WHO to study drug regulation and pharmaceutical policies in other countries including 42 sub-Sahara countries and the then Soviet Union. His subsequent conclusions were presented to the World Bank and are contained in formal reports of the Bank.

He served on the MCC for 22 years, 18 as chairman, and was reappointed as chairman four times, including by the former Minister of Health, Dr Zuma.

According to Folb, the Minister of Health made it known during 1997 that she intended to commission a review team to investigate and report on the drug regulatory system in SA. He supported this. He was later asked to recommend members for such a team and he recommended Professor Dukes. Folb had had a long-standing professional relationship with Dukes. They had co-authored a book on drug safety and co-edited the definitive work on drug safety.

According to Folb, Dukes had telephoned him on 1 January 1998 and told him of his appointment to the Review Team. Dukes advised him that his instructions were that he (Folb) should not be part of the review process. Folb understood this instruction to have emanated from Minister Zuma. Folb told Dukes that he found it inconceivable that the task could be carried out without the involvement of the chairman for 18 years. He said to Dukes that in that case all their communications should be in a public forum.

On or about 28 January 1998 Folb met with Dukes and the other international member of the Review Team, Dr Suzanne Hill. He made a short presentation to them in which he set out the fundamental principles that guided the work of the MCC. He was not requested to furnish any details, except that Dukes expressed a special interest in his relationship with Minister Zuma.

Two things struck Folb at the meeting as strange and problematic. The first was that Dukes spoke unpleasantly about the local members of the team. He said that they knew nothing about the business of drug regulation, and he was particularly insulting about Dr Roberts, the special advisor to the Minister, whom he referred to as a fool. As an example he mentioned Dr Robert's enthusiastic and uncritical support of Virodene, an alleged cure for HIV/AIDS, which had later been exposed as a ruse. At the same time Dukes and Hill emphasised the need to come to unanimous conclusions. These two did not go well together. They were pre-occupied with reaching consensus while at the same time Dukes lacked confidence in the local members of the team.

The second thing that troubled Folb was that Dukes and Hill had indicated - five days into their investigation - that they envisaged the disestablishment of the MCC, a change of name, his own removal as chairman and the removal of Schlebusch from office. He could not recall whether Brückner had been mentioned. It was said that Schlebusch was considered as part of the old guard.

Folb said that he dealt with the issue of Schlebusch at the meeting and told them that he regarded Schlebusch as highly competent, trustworthy and most importantly, honest. Furthermore, he had experienced him as loyal in the best sense, which included saying what had to be said. Folb said that as he had held a full-time academic position in addition to his chairmanship of the MCC, it was essential to have a person with Schlebusch's level of competence and independence as Registrar.

During the meeting Dukes alleged that the Review Team had not received any statistical information concerning the operation of the MCC. Folb said that he was surprised and told them that they must be mistaken as Schlebusch had given Prof Bannenburg, one of the members of the team, a detailed report containing statistics. Folb had personally seen the report. Folb said that he later noticed that this information was notably absent from the report of the Review Team and he could only conclude that they had not studied it, or had ignored it. It is also not contained in the list of documents attached to the report which the Review Team had consulted.

Folb had further brief contact with Dukes and Hill, the details of which I need not recount here.

In his evidence and in his report to the Minister, Folb dealt extensively with the report of the Review Team and its modus operandi. Regarding their modus operandi he said the following:

"The modus operandi of the review team was astonishing. It completely disregarded the normal process of taking and testing evidence. The team failed to take into account important information given it, while reaching without apparent good reason conclusions that would have been different had they considered the materials with which they were provided. In a number of significant respects the review team inexplicably acted outside its terms of reference, thus precluding anticipation of such action by those giving them information and opinion. This refers, inter alia, to the ventures of the review team into cosmetics, medicine costs, drug utilisation studies, drug information and rational prescribing. The result was that the team passed judgement on matters it had considered inadequately. In retrospect, and with the knowledge of the report, individuals (including senior members of the secretariat) were confronted with a ‘raw file'. This refers to allegations made by others against them to which they were expected to respond without being given any insight into the content of what had been said. Most disturbing of all, the review team submitted an additional secret report to the Minister of Health. On the basis of the latter, action was taken against the two most senior staff in the secretariat without those affected having access to its content. This was a violation of the rights of the individuals concerned and a remarkable departure from the principles of fair play and natural justice. It significantly taints the report, and brings into question the competence and fair-mindedness of the members of the review team. In general, there is indication that the review team selectively neglected to take account of information and material provided, with the result that the team reached decisions that may have been quite different had it considered open-mindedly all that was presented to it. The evidence that was collected by its members was biased, selective and superficial.

The recommendation of the review team to suspend the work of the existing MCC with immediate effect was ultra vires, and it was made without even cursory acknowledgement of the laws that govern the appointment and functioning of the statutory body. Many of the systems most successfully used in the MCC were ignored or trivialised. Financial implications of the changes proposed by the review team were dealt with cursorily in their report. All these weaknesses led to a proposal by the Review Team of a model for the new national regulatory authority that is outdated, westernised, bureaucratic and extravagant, not at all suited to a modern African country."

Folb said that the conclusions reached by the Review Team had not been discussed with him at any stage.

In his evidence, Schlebusch also dealt with the conclusions of the Review Team. It is common cause that there had been only one interview with Schlebusch which, according to him, had lasted about 1½ hours and according to Hill about 2 hours. Schlebusch said that the interview was of a general nature and he had not been confronted with any points of criticism of his performance of his functions. Hill confirmed this in her evidence. When she was asked in cross-examination what they had discussed with Schlebusch, she said:

"We went through our terms of reference, discussed problems and his solutions, his wish list, his views of the strengths and weaknesses of the system. It was wide-ranging."

Hill was asked whether they had inspected the operation of the systems of the directorate and she said they had walked around, talked to persons and looked at dossiers.

When she was asked whether it would not have been appropriate to have informed Schlebusch and Brückner of the allegations against them and to have asked for their comments, she said that it was not the Team's role to get back to them. She said they were assessing the overall effectiveness of the operation. She said it would not have made much difference if they had asked Schlebusch and Brückner for their response. It would not have altered their view that the regulatory authority was dysfunctional.

Hill eventually said that her understanding was that the conclusions reached by the Review Team would have been put to Schlebusch and Brückner before their removal from office and that they would then be given an opportunity to respond. However, she said the Team had not been concerned with the process of implementation of their recommendations. This was an important concession, but it does not tally with the contents of the supplementary report which clearly did not envisage any further process in terms of which Schlebusch and Brückner would have been afforded an opportunity to respond before their removal from office. The last paragraph of the supplementary report says the following:

"Once the principle of reform has been accepted there is also a special urgency in making the entire reform process known and beginning to implement it within a period of days. Current pressures are such that any progressive and partial ‘leakage' of information on plans for reform would easily lead to misunderstanding. It would also create a serious loss of confidence on all sides both in the system, and in the ability of the authorities to take bold steps to correct them." (My emphasis)

The supplementary report deals solely with the proposed "release" of some persons "closely identified with the present system". This statement clearly leaves no room for due process in respect of Schlebusch and Brückner.

Hill dealt in her evidence with the substantive findings of the Review Team. Schlebusch and Folb strongly contested most of the findings. It is necessary to briefly deal with the main deficiencies that the Review Team found to have existed, and the responses of Folb and Schlebusch thereto:

-1. Communication

According to the report, communication between all parties involved in the regulation of medicines (the Directorate, Department, Minister, MCC, general public and pharmaceutical industry) had deteriorated to the point that it was entirely inadequate or confused. This was attributed to the lack of effective formal channels of communication, the development of significant distrust and the lack of understanding of the need for effective communication. The team concluded that the breakdown in communication had become so severe that they believed that it could not be remedied in the then current structure. In this regard, reference was made to a common concern raised by manufacturers and other bodies about day-to-day communication with the directorate. The Review Team proposed the "simple solution" of the appointment of a liaison officer. They also referred to the recent controversy relating to Virodene, and it was said that more effective communication would have put the issue in perspective.

The report contains very little details of the alleged lack of communication and there is no reference to the persons or bodies that have complained about it. Schlebusch and Folb, on the other hand, gave a detailed account of the methods of communication with the public and manufacturers, as well as between the MCC, the Department of Health and the Ministry.

-2. Confusion of roles and responsibilities

The report refers in this regard firstly to the dual role of Schlebusch, namely that of Registrar of Medicines and Director: Medicines Registration and secondly the fact that "policy development" has become a major part of the MCC's activities.

Schlebusch and Folb stated that the dual role had never been a problem, and Folb was of the view that Schlebusch had been, as a result of the dual role, an important and useful link between the Department of Health and the MCC. Regarding the involvement of the MCC in policy matters, Folb denied that it had been so involved. He accepted that policy matters were the domain of the Minister and not the MCC.

These points of criticism relate to the then current structure and not to the performance and ability of Schlebusch or Brückner. It is further noted that the dual role still exists today as Schlebusch's successor, Ms Precious Matsotso, also performs this dual role. It therefore does not require further consideration.

-3. Administration

This is the key point of criticism against Schlebusch. The views of the Review Team in this regard are set out in a single paragraph and are expanded upon in the secret supplementary report. The main report states the following:

"Efficient administration and appropriate management are essential for any public sector structure. The team has identified many and serious problems in this regard in the current medicines regulatory system, notwithstanding the good intentions of personnel involved. There is lack of insight into modern management techniques. This has resulted in failure to use appropriate information technology, lack of adequate administrative support systems to meet the needs of handling large quantities of data, lack of mutual recognition of skills and expertise, inconsistent approaches to personnel management and lack of capacity to respond appropriately to a changing public health environment. Much of this situation is related to the confusion of roles and resulting stresses on the system discussed above, but is also due to entrenched behaviour patterns and ways of operating. In order to remedy this picture, there again need to be major changes in management structures and administrative systems as they currently exist in the Directorate for Medicines Administration and MCC."

The supplementary report adds some flesh to these vague conclusions. It says that the Review Team is of the view that the persons concerned represent

"a very conservative and inflexible approach both to management in general and to the problems of drug regulation and personnel supervision in particular. The individuals would be expected to experience great difficulty in adapting to fundamental change."

As far as the allegation that Schlebusch and Brückner are conservative and inflexible, no evidence at all was presented regarding Brückner. Apart from a number of bald statements to this effect, the evidence in this regard was that Schlebusch had been opposed to parallel importation of medicines, something that is seen as a method of reducing the cost of medicines. This was emphatically denied by Schlebusch and Folb. Schlebusch did, however, caution that parallel-imported medicines should meet the same rigid standards of quality, efficacy and safety.

The supplementary report says that at the level of personnel management, the persons concerned lack insight to a serious degree. It says that the team has noted numerous and specific complaints raised against them by various of their subordinates, to the extent that valuable staff have been lost to the organisation. Attitudes to subordinates tended in some cases to involve a degree of favouritism. Normal routines with respect to personnel appraisals were not always respected and reasonable and timely requests for leave might be rejected without reason.

The specific allegations regarding personnel appraisals and the rejection of leave are not elaborated upon. However, Schlebusch said that the source of these accusations are identifiable. There was evidence regarding a certain Mr Mohamed and Ms Helen Tigere. Ms Tigere also testified in the arbitration. There were ongoing disputes and grievances between Schlebusch and Brückner on the one hand and Tigere and Mohamed on the other hand concerning performance appraisal, promotion, and an application for leave by Mohamed. It is not necessary to deal with these issues, save to state that the grievances of Mohamed and Tigere had been the subject of internal investigations and that they had been found to have been largely unfounded. Schlebusch also lodged a grievance following allegations made against him by Tigere. He complained that things had been said about him by Tigere, and action taken, without him having had an opportunity to respond thereto. Afer an investigation lasting seven days, Dr G. Mtshali, Chief Director: National Programmes, found in favour of Schlebusch.

Schlebusch testified that he had had a conversation with Mtshali after his removal from office. According to Schlebusch, Mtshali had told him that had his report on Schlebusch's grievance been published in time, he would not have been removed from office. The Mtshali investigation was concluded on 6 March, i.e. before Schlebusch's removal from office, and his report was published on 7 April, about two weeks thereafter. One can infer from this statement by Mtshali that he had been of the view that the allegations of Tigere had weighed so heavily with the Review Team in making their recommendations that had his (Mtshali's) findings in favour of Schlebusch been known to the team, they would not have recommended his removal. This evidence of Schlebusch was not disputed at all.

The statement in the supplementary report regarding leave that was refused for no reason is presumably based on an incident regarding Mohamed. No other incident was suggested on behalf of the Department. The evidence revealed that Mohamed had applied for unscheduled leave and that it had been refused because of work pressure. He then appealed to progressively higher levels of management and it turned out that he had given conflicting reasons for his application for leave. Eventually Schlebusch's refusal to grant him leave was overruled by Dr Pretorius, Schlebusch's immediate superior.

It was put to Hill in cross-examination that the Mohamed and Tigere issues were echoed in the report and that they had attached undue weight to the untested evidence of these two persons. She denied this and said that their views were not solely based on that evidence. She said that the team did not actually believe Tigere, because Tigere had been, as she put it, "full of conspiracy theory" and had very "flamboyant" views. Hill insisted that the team's conclusions were not solely based on the interviews with Tigere and Mohamed. However, she could not name a single other person or incident upon which they had based their conclusions about Schlebusch's or Brückner's deficiencies as far as personnel management were concerned.

It was common cause that Mohamed and Tigere were particularly difficult employees. None of the witnesses were aware of any other disgruntled employees, and none were called to testify. It seems evident that a large degree of reliance was placed on the dubious and untested evidence of these two employees.

Hill was asked how the employees were selected for interviews. She said they voluntarily presented themselves. It seems logical that employees with grievances would in such a case be the first to come forward. There is no indication that they were selected at random so as to ensure a balanced representative view.

In any event, even if more employees than Mohamed and Tigere had complained about promotion, performance appraisals and refusal of leave, Schlebusch and Brückner had not been given the opportunity to respond to such allegations.

Another aspect which was emphasised as evidence of poor administration was the large volume of paper that had been presented to the members of the MCC for the purposes of their regular meetings.

Schlebusch agreed that the amount of paper presented to the members was impressive. He said, however, that applications were often voluminous. The papers were properly categorised for ease of reference and members did not have to work through all the paper work. They could easily access documents that pertained to matters that they were dealing with. Some members did complain about the amount of paper but they were members who were not involved in the expert committees. He said that SA, unlike other countries, had a system of in-house evaluation of applications and that that system compelled the amount of paper. Members had to vote on applications and it was necessary to have all the information readily available. It avoided adjournments when questions were asked about certain aspects.

Whatever the most efficient methodology, the volume of documentation was requested by the chairman and by council members. This cannot be seen as a reflection on the ability of Schlebusch.

As mentioned before, there was very little evidence to support the allegation that Schlebusch and Brückner had been conservative and inflexible as far as drug regulation was concerned. The only evidence tendered by the Department in this regard was an allegation that Schlebusch had been opposed to parallel importation of medicines. Schlebusch and Folb denied that he had been opposed to it. In fact, they both strongly supported parallel importation, but had cautioned that the same standards of safety, quality and efficacy had to be applied to such medicines. Folb's evidence regarding the alleged conservatism and inflexibility of Schlebusch and Brückner was the following:

"Regulation and control has a conservative element inherently. As far as Mr Schlebusch is concerned he was conservative in protecting its principles. The organisation changed all the time. It was in close touch with international standards, but it had its own mind. This was not achievable without the bravery and integrity of Mr Schlebusch and his team. They were slow on transformation, I told them so, but they were not obstructive. They were not inflexible. Mr Schlebusch is a principled person. It is not in my knowledge of Mr Schlebusch and Miss Bruckner that they would favour persons. Mr Schlebusch was imbued with principles of natural justice. He was very flexible, even progressive."

-4. Concentration of influence within particular groups

It is not clear whether this deficiency in the system which the Review Team found to have existed, was blamed in any way on Schlebusch, Brückner or Folb. No evidence was presented in the arbitration in this regard and I shall not further deal with it.

-5. Conflict of interests

Hill said that the Review Team could not believe that members of the MCC held consultancy positions to industry. Once again, it is difficult to determine whether it was alleged that Schlebusch or Brückner were to be blamed for this. In any event, Folb testified that the MCC had been meticulous in ensuring that no conflict of interests ever existed.

-6. Technical capacity

 This does not seem to reflect on Schlebusch and/or Brückner.

-7. Non-orthodox (complementary and traditional) medicines

This refers to lack of legislative provision to deal with these medicines and no accusations were levelled against Schlebusch and Brückner in this regard.

-8. Development of capacity

According to the Review Team, recruitment had taken place on an ac hoc basis and no measures had been taken to create more capacity. This appears to be an accusation levelled at Schlebusch, but it was not pursued on behalf of the Department in the arbitration.

-9. Incorrect priorities

This was not pursued in the arbitration. Folb, in his response to the report, denied this and said that the MCC had years ago implemented what the Review Team suggested.

The following persons testified on behalf of the Department of Health: Dr J.H.O. Pretorius, the Deputy Director-General of the Department of Health; Ms Precious Matsotso, Schlebusch's successor; Mr Bhada Pharasi, the former Chief Director of Registration, Regulation and Procurement, and Schlebusch's immediate superior; Dr Vera H. Reece, the current chairperson of the MCC, and successor to Folb; Ms Helen Tigere; Dr Ian Roberts, Special Advisor to the Minister of Health; Dr Suzanne Hill; and Dr T.D. Wilson, Chief Director Responsible for Hospital Services, to whom Schlebusch currently reports.

I shall deal separately with the evidence of each of these witnesses and the response of Schlebusch and, where relevant, Folb, to their evidence.

Pretorius testified that his working relationship with Schlebusch went back to the 1970's. He had much experience of Schlebusch's work performance and he knew him well as a person. He said that Schlebusch had during all the years that he had known him, received excellent performance assessments. He was always diligent and conscientious. He said, however, that as transformation in the Department developed and changes were put into place, he experienced that Schlebusch had been resistant. He said that at one point meetings were held on weekends, attended by himself, Schlebusch and others, to develop a new legislative framework. They went through proposed legislative changes clause by clause and he (Pretorius) was left with the impression that Schlebusch found changes that the Minister had wanted difficult to accept.

Regarding the alleged inflexibility of Schlebusch, Pretorius gave evidence about the leave application of Mohamed which Schlebusch had refused. When asked if he could mention any area in which Schlebusch had resisted change, he could not recall any.

Pretorius was an extremely poor witness. He was prepared to make sweeping derogatory statements about Schlebusch but whenever he was asked to substantiate his statements, he could give no examples. He obsequiously echoed the reasons given by the Department for dismissing Schlebusch and the findings of the Review Team.

In several instances the full truth only emerged in cross-examination. The best example is the Mohamed leave incident. In his evidence-in-chief, Pretorius said that Mohamed had been offered an opportunity of a lifetime to accompany his grandfather on an overseas trip and that Schlebusch had unreasonably refused his request for leave. However, it emerged in cross-examination that Mohamed had been untruthful and had given several conflicting reasons for his request for leave.

Another example is his statement that Schlebusch and Brückner had not been demoted and that their new positions were of equal status and importance. The utter falsehood of this statement was revealed in cross-examination. In any event, it appeared that he had no idea what their new positions entailed.

Pretorius said that the Department had decided to redeploy Schlebusch and Brückner because of their unsuitability for the new dispensation. It is common knowledge that the department never decided to redeploy them. They were unceremoniously suspended, and were only reinstated in different positions after intervention by the Public Servants Association and attorneys.

The next witness for the Department was Ms Precious Matsotso. She is Schlebusch' successor as Registrar of the Medicines Control Council and Acting Director: Medicines Registration. She was very critical of the performance of Schlebusch as Registrar.

Her points of criticism were the following:

-1. There was a lack of time lines for industry to respond to queries submitted to them in respect of applications. She said that there were applications dating back to 1981 which have not been finalised due to queries that have not been answered by industry. She conceded that these applications have probably been abandoned by the applicants, but said that the Department was renting office and storage space from Old Mutual and could not afford to store these old applications. This point was not pursued in much detail and no indication was given of the extent of the storage problem. I accept that something should have been done to dispose of such old applications. On its own, this cannot be a serious indictment against Schlebusch or Brückner, and must be viewed in the context of the totality of the evidence.

-2. Counsel for the Department tried to draw Matsotso on the allegation made that Schlebusch had been resistant to parallel importation of medicines, but she said that she could not remember whether he had made an input in that debate. When pressed further, she said that he should have made a contribution to this debate and he had not. This of course contradicts her statement that she could not remember whether he had made an input.

I find that her evidence in this regard is too vague to counter the direct evidence of Schlebusch and Folb that Schlebusch had supported parallel importation with the proviso that such medicines should meet the same standards of safety, efficacy and quality of all other medicines.

-3. She had strong views about the alleged backlog in the registration of medicines. She said that when she took over from Schlebusch, the backlog stood at about 400 - 800. She said, however, that she had no knowledge of what is an acceptable backlog in terms of international standards. She acknowledged that since she had taken over, the backlog had increased to about 2600. When put to her that South Africa had had, during the term of office of Schlebusch, one of the fastest turn-around times in registration of medicines, she said that she did not believe this. She attributed the increase in the backlog during her term of office to the resignation of key staff members. When asked which staff members she referred to, she mentioned Annemarie Steenkamp. However, it transpired that Steenkamp had resigned only in June 1999, long after the backlog had already escalated. It further appears from a graph submitted by Schlebusch, which was used as a performance measurement for Medical Control Officers (MCO's), that Steenkamp was one of the slower MCO's.

Matsotso further testified that she had investigated the reasons for the backlog and had found three reasons: inadequate staffing, the system whereby the MCC approved medicines subject to provisos or queries, and the lack of time lines for evaluators. As far as staffing was concerned, Matsotso could not deny that Schlebusch had not been permitted to fill vacancies due to down-sizing in the Department. She said that she had abolished the system of provisos and that only final applications were now considered by the MCC. This obviated the need for imposing provisos to which applicants often did not respond. Regarding the alleged lack of time lines for evaluators, she was referred to a flow diagram which describes in detail the process to be followed by evaluators. She said that she had given them a new flow diagram, but admitted that it was too early to tell whether it had the effect of speeding up the process.

The evidence of Matsotso has to be weighed up against that of Schlebusch and Folb to the effect that South Africa had had during the term of office of Schlebusch and Brückner, one of the fastest turn-around times for registration.

-4. Matsotso criticised Schlebusch's affirmative-action performance. She said that when she took over, only 17 out of 47 staff were of colour. She said that she had made great strides in improving the racial balance. It was put to her that about 16 staff members had resigned following the dismissal of Schlebusch and Brückner. She said that only four resigned during her time, but she was not aware how many resigned between Schlebusch's departure and her appointment. If it is correct that there had been something like 16 resignations, it obviously explains why Matsotso had been able to make better progress as far as affirmative action is concerned. Space which had not existed before had been created by the spate of resignations before her appointment.

-5. Matsotso said that she had found a lack of confidentiality, which is in contravention of section 34 of Act 101 of 1965. She said that representatives of industry had been allowed to remove and copy files. This was also alleged by Dr Reese, the current chairperson of the MCC. It was emphatically denied by Schlebusch who said that the issue of access to files and dossiers had been strictly controlled in terms of a standard operating procedure and always under supervision of a senior staff member. He said it was sometimes necessary to allow industry access to files and dossiers because they needed to correlate their own information with that of the secretariat.

-6. Matsotso said that there had been a lack of standard operating procedures (SOP's). She conceded that she had come across references to SOP's, but said that they were guidelines for industry, and not for MCO's. This was contradicted by Hill, who testified that she had seen numerous SOP's. Hill said, however, that they had not been adhered to. Schlebusch was perplexed by the evidence of both Matsotso and Hill in this regard. He said that the SOP's were available, indexed and cross-referenced. A software system known as ZIZO had been purchased and customised which made all SOP's accessible to MCO's on the network. Staff had been told at regular Monday morning meetings how to access the SOP's on the network. Insofar as Matsotso and/or Hill had said that they had not been used, he explained that experienced MCO's did not need to continually refer to them because they knew exactly how the process worked.

-7. Regarding the turn-around times mentioned earlier, Matsotso said that South Africa's registration process was one of the slowest in the world. This is contradicted by comparative statistics submitted at the arbitration, and which had also been submitted by Schlebusch to the Review Team. According to those statistics, South Africa had compared very favourably with the rest of the world. These statistics were not referred to in the report of the Review Team, although it had received them. Hill said that she had been sceptical about the statistics because she was not sure whether they compared "apples with apples". However, she gave no reason why she doubted their validity and conceded that the Review Team had not referred them back to Schlebusch in order to clarify whether the comparisons were based on similar criteria. Schlebusch said that he had obtained the comparative figures from an authoritative international publication on drug regulation, Scrip, and had no doubt that the comparisons were valid.

Matsotso said that she had seen another comparative study according to which South Africa did not feature in the top nine countries. She admitted, however, that South Africa had not been evaluated for the purposes of that study.

-8. Matsotso was asked in cross-examination whether she had at any stage since assuming office contacted Schlebusch for information, or to clarify matters that were not clear to her. She said it had never occurred to her to do so. I find this a startling confession. The image that she endeavoured to convey was that she had found the secretariat of the Council in a shambles. She walked into a new position of which she had very limited knowledge at the time. If there had been things that were unclear or had concerned her, such as SOP's she could not find, or statistics on backlogs, or reasons for backlogs, the obvious source of information or clarification would have been her predecessor who had occupied her position for many years.

The next witness was Mr Bada Pharasi. He was the Chief Director of Registration Regulation And Procurement and Schlebusch's immediate superior in his capacity as Director: Medicines Registration.

Pharasi said that he agreed with the report of the Review Team. He spoke generally about the need to reform and the problem with the dual role of Registrar and Director. He mentioned the problem of backlogs and the fact that the Directorate had been unable to retain staff. He said someone resigned every month, but he did not blame Schlebusch for this, and said it was because of uncompetitive salaries.

He mentioned in his evidence-in-chief that Tigere had accused Schlebusch of racism. However, in cross-examination he said that he had told the Review Team not to take notice of that accusation.

He referred to the Mohamed leave issue and said that although he acknowledged that it had been Schlebusch's prerogative to decide on the leave for Mohamed, he regarded Mohamed's application as reasonable and that Schlebusch had been unnecessarily inflexible.

Pharasi also related an incident where the Pharmaceutical Manufacturers' Association had written a letter complaining that they had not been consulted about a matter. The Minister then wanted to ‘set a trap' for Schlebusch and requested him, through Pharasi, to submit all correspondence between the PMA and the Directorate to her. She wanted to see whether Schlebusch would include that letter. When the correspondence was received, the letter was not there. Schlebusch's evidence in this regard was that he had no idea what the Minister wanted to do with the correspondence. The PMA represented the entire pharmaceutical manufacturing industry and the correspondence with the PMA had been voluminous and stretched over many years. As it concerned various topics, it was scattered in different files all over the organisation. He asked Pharasi what exactly the Minister was looking for so that he could narrow down the search, but Pharasi did not know. He asked his staff to collect all correspondence and he handed it to Pharasi. He never heard about it again until Pharasi testified. If the PMA letter had been omitted, it had not been intentional.

Pharasi was asked under cross-examination about him escorting Schlebusch to his office on the day of his departure. He said it had come as a shock when he was instructed to do so. He found it very difficult and said it was "really bad".

Schlebusch wrote a note on 29 March immediately after he had gone to his office to collect some of his personal belongings under the surveillance of Pharasi. The note is the following:

"On 29 March 1998, during a visit to my office to obtain some of my personal belongings, where B. Pharasi was keeping surveillance over me, I asked him why he had permitted the Review Team [MRTT] to make the untrue and untested statements that were critical of Miss Brückner and myself as he, as our direct supervisor, was fully aware of the issues we were being accused of. He confirmed that he had seen the letter of the Director General but that he had never seen the "supplementary report". I asked him why he had then not objected to the statements in the Director-General's letter as he knew what the factual situation was. He responded by saying that whilst he could still discuss the matter with the Director-General, nobody would dare go against the Minister. I told him that as our leader, he had abandoned us. He also told me that the perception that some of the MRTT members had, was that he did not in fact run the chief directorate, and that I prescribed to him. From the latter statement I concluded that some persons on the MRTT clearly wanted me removed from my position and that Pharasi was not willing or able to oppose them."

Pharasi disputed the contents of the note only insofar as it conveys that he was not running the department. He said that had been the perception of only the Director General and certain officials. He said the statement that nobody would dare to go against the minister was stated out of context. He did not explain what the proper context was.

On the issue of the high staff turnover, he was asked in cross-examination whether it had been the fault of Schlebusch and he said he did not know. He said that he had had an exit interview with Mohamed and that Mohamed had told him that as long as people like Schlebusch were there, more people would resign. However, under cross-examination he admitted that Mohamed had left long after Schlebusch had left. This, of course, makes nonsense of the statement that Mohamed had left because of Schlebusch and/or Brückner. Pharasi said he did not know of any other staff that left because of Schlebusch or Brückner.

In view of the above, and his statement that he had agreed with the contents of the supplementary report, Pharasi was asked to comment on the statement in this report that valuable staff had been lost because of Schlebusch and Brückner's alleged "lack of insight to a serious degree". No meaningful response was given.

Regarding the alleged favouritism that the Review Team found, Pharasi could only refer to the allegations made by Mohamed and Tigere. He had no knowledge of any other persons that had complained.

Regarding the allegations that normal routines for evaluations had not been respected, Pharasi again referred to Tigere's grievance. (As mentioned previously, after an investigation her grievance had been found to have been without ground.) He also said "I seem to recall that Mohamed had a similar problem."

Regarding the allegation that reasonable requests for leave had been refused, it was put to Pharasi that it obviously referred to Mohamed. He denied this and said that Mohamed had said that many other people can confirm it. No other names could, however, be given.

It must be remembered that Pharasi was a member of the Review Team. Although he had not taken part in the interviews, Hill and Dukes must have shared their notes of their interviews with the rest of the team. Pharasi can therefore be presumed to know on what evidence the findings of the Review Team were based. As appears from the above, he is not aware of any evidence, apart from that presented by Tigere and Mohamed, upon which the Review Team had based their findings.

The next witness was the present chairperson of the MCC, Dr Vera Helen Reese.

She testified about the alleged backlog and said that the new Registrar, Matsotso, had taken steps to clear the backlog. She said that in some areas the backlog had been reduced and in other areas it had remained the same. This evidence is in direct conflict with that of Matsotso herself, who admitted that the backlog had escalated. When confronted with the statistics, gleaned from the Government Gazette, regarding the declining number of registrations since the removal of Schlebusch and Brückner, all that she could say was that it does not ring true.

She testified about the alleged lack of confidentiality. She was aware that access to dossiers had been regulated in Schlebusch's time by a standard operating procedure, but said that had now been stopped.

When asked about allegations of racial discrimination as far as promotions were concerned, she said she knew of two instances, namely Tigere and a certain Ushma Metha. She had no knowledge about the details of the issues.

The next witness was Helen Tigere. She is a Medicines Control Officer and has an impressive curriculum vitae. She has a masters degree from the University of Paris and a higher diploma in industrial pharmacy. She worked at the University of Rome, doing clinical studies. She started working in the Department of Health in 1995 as an MCO.

Her evidence was not very coherent, but it covered mainly the following aspects:

-1. That Brückner had not given her the promotions she thought she had been entitled to;

-2. That files had not been treated with the necessary confidentiality;

-3. That the SOP's were very vague and irrelevant and that there had been differences of opinion "most of the time about most issues."

-4. The issue with Schlebusch that gave rise to her grievance. She maintained, despite the fact that in an investigation her grievance had been found to be groundless, that Schlebusch had been favouring a particular company.

Tigere wrote a closely typed 4-page memorandum to Brückner that can only be described as an insolent, intemperate tirade. As an illustration, I quote the last few sentences of the last paragraph:

"Things cannot go on like this. You cannot disrupt subordinate's days and then come back and say they are not doing their work or they are not productive. I wonder what you are up to now. I only know that malice always brings you to my office. I have never witnessed this type of behaviour in my whole life. Are you going to leave me in peace. Now that Umar is gone from this section, you are gunning for me now? Think again."

The above is the tone of the entire memorandum. It is obvious that Tigere is a bitter individual whose judgment cannot be relied upon. I was not at all impressed with her as witness. She was inclined to the same kind of extravagant statements. She said initially in her evidence that she bore no grudge against Brückner, but the extent of her bitterness soon became apparent.

She said at first that she had said nothing negative about Brückner to the Review Team, but later on said that she and Mohamed had complained about many things such as lack of training, work not being evaluated and many grievances where Brückner was concerned.

My evaluation of Tigere was confirmed by Hill who said that she had been full of conspiracy theory and had expressed flamboyant views. I agree with Hill on this score, although I find it strange that the views of Tigere are then to such a large degree reflected in the report of the Review Team. As I have said, none of the witnesses could refer to a single member of staff, other than Tigere and Mohamed, that had given evidence which supported the findings of the Review Team, not to mention the fact that no such witnesses testified at the arbitration. Not even hearsay evidence could be presented.

Dr Ian Roberts, the special advisor to the Minister, also testified. He has degrees in Biochemistry, medicine and management. He had been the Minister's advisor for 3½ years and was a member of the Review Team.

He gave evidence regarding his interaction with Schlebusch when new legislation was drafted. He had formed a perception that Schlebusch had been unwilling to produce the amendment bill. One of the issues was parallel importation. Roberts said that Schlebusch had been of the view that nothing in the existing legislation prevented parallel importation, while he (Roberts) disagreed with that. Whether Schlebusch or Roberts was correct, is irrelevant. This seems to be a difference of opinion between two professionals that could have been solved by checking on the relevant legislation, and does not reflect on the ability or attitude of either.

Roberts's role in the process of the drafting of the legislation was severely criticised by Pharasi in a letter dated 13 March 1997 to the Director-General. He wrote the following:

"What is more, I would be failing my own conscience if I did not point out that the conduct of the Minister's Special Advisor throughout the entire process of finalising the amendments was, at best, intimidatory towards the rest of the task team and, at worst, insulting. This is born out not only by his usage of insulting language, but the throwing of tantrums whenever his viewpoint was not shared by the rest of the team."

Roberts also mentioned the letter in which the PMA complained that they had not been consulted on a specific matter. When questioned, it appeared that he had no specific knowledge of the issue and his evidence did not take it any further.

He further mentioned an incident where unregistered intravenous fluids had allegedly been brought into the country. He said that he had only peripherally been involved in the issue, and could not give the details.

He also said that there had been evidence that certain drugs were freely available in South Africa that were heavily regulated in other countries, such as Stopayne. This issue was not debated and there is no evidence that Schlebusch was at fault in this regard.

The next witness was Dr Hill. I have already dealt with much of her evidence in relation to the report of the Review Team.

It can be stated in general that her evidence lacked detail. The startling aspect of it is that she and Dukes had only briefly interviewed Schlebusch, and the interview had been of a general nature. She had said one of the main problems was that it was so difficult to obtain statistical information. Yet, she admitted that Schlebusch had submitted such information, but that she had doubted the validity thereof. If that is the case, it is perplexing that the team did not ask for further or better information, or had attempted to clarify their difficulties. Hill was asked whom they had interviewed in their search for statistical data and she mentioned certain MCO's, namely Du Toit, Steenkamp and Kleyn. It was put to her that none of them were involved in the gathering of statistical information, and that Brückner was the best person to have asked for it. She could not remember whether they had asked Brückner.

It was put to Hill that the team had never taken up the issue of backlogs with Schlebusch and she said that they had no reason to do so.

It seems that the Review Team's efforts to obtain information had been extremely superficial, and that they had ignored the most obvious sources of information.

Hill said that their interviews with industry revealed that there was a difference of opinion regarding the work of the MCC. Some regarded the MCC and the secretariat as professional whereas others said that they could never get information and that it felt as if their applications were in a black hole. Hill did not explain why she chose to accept the views of that part of industry that had been negative towards the MCC. In any event, it was pointed out by Folb and Schlebusch that the process of medicines registration is adversarial in nature. Unsuccessful applicants would tend to blame the decision-maker rather than admit the defects on their side. Hill gave no indication of which members of industry had expressed negative views, and not a single representative of industry was called to support this view.

Hill said that by the time they had written their report it was clear that the regulator was at the point of collapse. She said that the atmosphere of distrust was extraordinary. The situation could not be resolved while retaining Schlebusch and Brückner. When asked what she meant by saying that the regulator was at the point of collapse, she became evasive.

Hill repeatedly said the information they had gathered was "variable". She said that, for instance, the views regarding Brückner had varied from the extreme views of Tigere to extremely positive. She could not remember any other negative comments regarding Brückner, but said that the Review Team's recommendation to remove her was based on the unsatisfactory information flow between the secretariat and the MCC. She did not say what that "unsatisfactory information flow" entailed. She also did not say why the team had chosen to ignore the "extremely positive" views expressed about Brückner.

The last witness for the Department was Dr T.D. Wilson, the Chief Director for Hospital Services, and the person to whom Schlebusch now reports. His evidence was that he had welcomed Schlebusch in his department on a temporary or permanent basis. He said that he understood that Schlebusch had been in dispute with the Department and that he required time to consult with his lawyers. He accommodated him in that regard. He said that initially Schlebusch did good work in his department, but later did not meet certain deadlines.

It is not necessary to deal in detail with this evidence, as it does not concern the reasons for the dismissal/demotion of Schlebusch. If Schlebusch now performs his duties with less enthusiasm than in his previous position, it is understandable under the present unpleasant circumstances.

Only Schlebusch and Folb testified on behalf of the applicants. I have dealt with their responses to the different issues raised by the witnesses for the respondent, and need not deal separately with the content of their evidence. Brückner did not give evidence. The evidence against her was so scant that there was nothing for her to answer.

EVALUATION OF THE EVIDENCE AND ARGUMENT

I found both Folb and Schlebusch very impressive witnesses. It is true that Folb may have been embittered by his dismissal as chairman of the MCC. However, he is clearly a man of great character and distinction. None of his evidence was seriously challenged in cross-examination and insofar as it was challenged, the challenges led nowhere. The same applies to Schlebusch. He seems to be an extremely meticulous person who has kept detailed notes of all the events. He gave very compelling answers and explanations to all the allegations made against him.

The same cannot be said of many of the witnesses that testified on behalf of the Department. I had reason to seriously doubt their objectivity and, in many instances, the truthfulness of some of the witnesses. Other witnesses had so little personal knowledge of the issues that they made little contribution.

Mr Saint raised two technical points.

The first point is that the request for arbitration had been signed by a certain Mr P.J. Blommenstein, an official of the Public Servants Association, and not by the applicants, Schlebusch and Brückner, personally. Before dealing with the merits of this point, I wish to first make the comment that I regard it as inappropriate to raise a technical point of this nature for the first time after 12 days of arbitration. It should have been raised in limine.

There is conflicting authority on this point. It was held in Rustenburg Platinum Mines Ltd (Rustenburg Section) v Commission for Conciliation, Mediation & Arbitration & Others (1998) 19 ILJ 327 (LC) by Gon AJ, in relation to section 191(1) of the Labour Relations Act, that the employee must personally sign the referral. Gon AJ differed in this regard from Seady AJ in Moolman Brothers v Gaylord NO & others (1998) 19 ILJ 150 (LC) where she held that this view was overly technical. Seady AJ went on to state the Act clearly contemplated that someone other than an employee could be the referring party, e.g. a trade union that brings the application on its own behalf and on behalf of its members. In such a case the trade union could sign the application.

Revelas J in Impact Maintenance Services v CCMA and others, J4203/98 said

"[22] There can be no objection if a person who is entitled to represent a party to a dispute (employee) as foreseen in sections 138(4) and 161 of the Act, refers the matter on the employee's behalf to the CCMA or Council for conciliation or such person, on behalf of the employee, requests an arbitration hearing. However, these functions may not be exercised on behalf of an employee, by a labour consultant."

Furthermore, Section 138(1) provides that

"The commissioner may conduct the arbitration in a manner that the commissioner considers appropriate in order to determine the dispute fairly and quickly, but must deal with the substantial merits of the dispute with the minimum of legal formalities."

PSA is a registered trade union and is permitted to represent its members in an arbitration. There can therefore be no objection to an official of that trade union signing the form on behalf of the applicants. I further find that it would be over-technical to refuse to render an award, after 12 days of arbitration, on the ground that the applicants have not personally signed the request for arbitration.

I therefore reject this point.

The second technical point raised by Mr Saint is that the CCMA has no jurisdiction to award reinstatement or compensation to the applicants. He based this argument on the curious wording of Item 4 to Schedule 7 which reads as follows:

"4. Powers of Labour Court and Commission

(1) The Labour Court has the power to determine any dispute that has been referred to it in terms of item 3 on terms it deems reasonable, including, but not limited to, the ordering of reinstatement or compensation.

(2) The arbitrator has the power to determine any dispute that has been referred to it in terms of item 3 on reasonable terms."

Mr Saint argued accordingly that only the Labour Court has jurisdiction to award reinstatement of compensation because that power has specifically been conferred upon it, whereas there is no mention of reinstatement or compensation as falling within the powers of an arbitrator.

This issue was comprehensively dealt with in Sajid v The Juma Musjid Trust ‑ Paul Nel, KN25878 where the arbitrator found that the CCMA has no jurisdiction to award reinstatement or compensation. I differ from his finding.

John Grogan in Workplace Law, 4^th edition on page 206 said the following:

"Item 4 clearly gives judges and arbitrators a wide discretion in shaping orders for relief in unfair labour practice proceedings. Whether any legal significance is to be attached to the different formulations of items 4(1) and (2) is unclear, except that the phrase ‘on terms it deems reasonable' appears to confer a wider discretion on the court, while the phrase ‘on reasonable terms' indicates that arbitrators' orders are subject to an objective standard of reasonableness. At first glance, it appears odd that the Labour Court, which has jurisdiction only over unfair discrimination disputes, should be given power to order ‘reintatement' in this context, since dismissals based on discrimination are catered for in section 187(f). An arbitrator must self-evidently have the power to order re-employment in disputes arising from para (d)."

If an arbitrator has no power to reinstate or order compensation, items 2(1)(b), (c) and (d) would be completely emasculated. What would the purpose be of an arbitrator considering a case of unfair demotion if he has no power, in the case where he finds that the employee has been unfairly demoted, to reinstate him in his former position? Similarly, an arbitrator should have the power to reinstate an employee who has been unfairly suspended as contemplated by subitem (c) and to reinstate a former employee where the employer had refused to reinstate or re-employ him or her in terms of an agreement, as contemplated by subitem (d).

Lastly, there could be no reason why arbitrators should have the power to reinstate employees who have been unfairly dismissed, but no power to reinstate employees who have been unfairly demoted, suspended or not reinstated in accordance with an agreement.

I therefore also reject this point.

Mr Saint also tried to justify the action against Schlebusch and Brückner on grounds of affirmative action and the constitutional injunction to create a public service broadly representative of the South African people. This has never been stated as the reason for the action taken against Schlebusch and Brückner and the respondent cannot ex post facto rely on affirmative action as a defence.

I now proceed to deal with the merits of the case.

Mr Saint presented no argument regarding the procedural fairness or otherwise of the action taken against Schlebusch and Brückner, but stopped short of admitting that it had been procedurally unfair. However, he argued that the action of "transferring" them to other positions had been justified. Although he did not admit that Schlebusch and Brückner had been demoted, he made no submissions to the effect that their new positions were of equal status and importance. The salaries and benefits of the applicants have not been affected, but it is clear that they have not been given any meaningful alternative positions. They have merely been given alternative tasks to perform. The term "transfer", as used by Mr Saint, is a glaring euphemism. In any event, they were in the first place removed from office and suspended, and only reinstated after the intervention of their attorneys and given alternative tasks, pending the finalisation of these proceedings. There is no question of "transfers" for business or operational reasons.

Unilateral demotion of an employee constitutes a repudiation of the contract of employment. See Jooste v Transnet Ltd t/a SA Airways (1995) 16 ILJ 629 (LAC); Denny v SA Loan, Mortgage & Mercantile Agency Co Ltd 3 EDC 47; Smith v Cycle & Motor Trade Supply Co 1922 TPD 324; Groenewald v Cradock Munisipaliteit & 'n ander (1980) 1 ILJ 269 (E); Van der Riet v Leisurenet t/a Health and Racquet Club[1998] 5 BLLR 471 (LAC).

In the Groenewald case, supra, Eksteen J said:

"Die beginsel in hierdie sake neergelê is dat 'n werkgewer wat 'n werknemer in 'n besondere pos in diens neem en daardeur 'n sekere status aan hom verleen, nie geregtig is om sonder die goedkeuring van die werknemer die wesenlike aard van hulle ooreenkoms te wysig nie. As die werkgewer dit doen, en daardeur die status van sy werknemer verlaag, kom dit neer op 'n belediging vir die werknemer en 'n eensydige beëindiging van die kontrak tussen die partye."

In the Van der Riet case, supra, the Labour Appeal Court found that the applicant had been constructively dismissed, as a result of his unilateral demotion although there had been an operational rationale for his demotion. Kroon JA said

"[39] Despite the existence of a commercial rationale for the introduction of the new structure, including the demotion of the appellant, the important fact is that it was effected without any consultation with the appellant. That conduct on the part of the respondent was unfair vis‑a‑vis the appellant (see the WL Osche Webb case supra), and the more so because it was coupled with a charge of a shortcoming in the appellant's performance which he was not afforded an opportunity of refuting. That was one of the very things he complained of and which he said, understandably, had destroyed his trust in the respondent."

These cases concerned constructive dismissals. Had Schlebusch and Brückner resigned as a result of their demotion, and claimed unfair constructive dismissal, they would, on the strength of these cases, undoubtedly have been successful, and if appropriate, been reinstated.

One cannot trivialise the procedural unfairness of the action against Schlebusch and Brückner., as Mr Saint seems to be doing. In relation to the need to consult prior to dismissal for operational reasons, Froneman DJP said in SA Clothing & Textile Workers Union & others v Discreto - A Division of Trump & Springbok Holdings (1998) 19 ILJ 1451 (LAC) at 1454: 

"[8] Every person has the constitutional right to fair labour practices (s 27(1) of the interim Constitution; s 23(1) of the final Constitution). As far as retrenchment is concerned, fairness to the employer is expressed by the recognition of the employer's ultimate competence to make a final decision on whether to retrench or not (cf Atlantis Diesel at 1252H ( ILJ ); 28I (SA)). For the employee fairness is found in the requirement of consultation prior to a final decision on retrenchment. This requirement is essentially a formal or procedural one, but, as is the case in most requirements of this nature, it has a substantive purpose. That purpose is to ensure that the ultimate decision on retrenchment is properly and genuinely justifiable by operational requirements or, put another way, by a commercial or business rationale. The function of a court in scrutinizing the consultation process is not to second‑guess the commercial or business efficacy of the employer's ultimate decision (an issue on which it is, generally, not qualified to pronounce upon), but to pass judgment on whether the ultimate decision arrived at was genuine and not merely a sham (the kind of issue which courts are called upon to do, in different settings, every day). The manner in which the court adjudges the latter issue is to enquire whether the legal requirements for a proper consultation process have been followed and, if so, whether the ultimate decision arrived at by the employer is operationally and commercially justifiable on rational grounds, having regard to what emerged from the consultation process. It is important to note that when determining the rationality of the employer's ultimate decision on retrench­ment, it is not the court's function to decide whether it was the best decision under the circum­stances, but only whether it was a rational commercial or operational decision, properly taking into account what emerged during the consultation process."

As in the case of retrenchment, there is a need to consult, if not to negotiate, before an employee can be demoted. There is no reason why the principles set out above should not apply in a case of demotion.

Although courts and arbitrators should not lightly interfere with rational business decisions of employers, the facts of this case cry out for interference. Schlebusch and Brückner had been unceremoniously removed from office, escorted from the premises and treated like criminals. In addition, no convincing operational reasons for this action have been shown. The only question is what the nature of the above-mentioned interference should be.

It is clear that reinstatement of Schlebusch and Brückner will cause great turmoil in the Department. They have been replaced and new systems have been installed. They will not be received back with open arms and they can expect to be met with great resistance. Many of their loyal subordinates have resigned and have been replaced by new persons. The bitterness of Tigere towards Brückner has not subsided, and they would have to find ways to work together. This arbitration, and the bitter exchanges in the course thereof, must have further soured relationships. I asked Schlebusch how his reinstatement would impact on the secretariat and the Department and his response, according to my near verbatim notes, was the following:

"The directorate is in a major crisis at the moment. When all of us were removed, 63 years of experience was removed. Lots of others subsequently resigned. The directorate is in trouble. I know for a fact that control has collapsed. Unregistered products are pouring into the market. There is a loss of institutional memory. Statements made by remaining staff are reminiscent of statements we made 20 years ago. There is little technical leadership. I could have trained people myself. That is lost. There is no ability to retrain new people.

As I interface with staff now, they are devastated. There was a suicide. It had to do with the situation. Change management has to be handled. There is a need to bring back experienced people. We had wanted to transform. When we left, 27% were from disadvantaged communities. We could only wait for vacancies. It was a major achievement.

The medical control function is a national asset. The worst case for Council was to lose its chairman. Leadership was lost. If you lose the leadership and the arms and legs, it is the worst case scenario. I can go a long way in putting Humpty Dumpty together again."

Schlebusch's positions still exist. Matsotso testified that Brückner's position has been abolished. No reason has, however, been suggested why it cannot be restored.

Whether Schlebusch will succeed in putting Humpty Dumpty together again, I don't know. However, if he does not succeed, and continued employment in their previous positions proves untenable, the parties should be able to negotiate better severance packages for Schlebusch and Brückner. It is common cause that financial settlements have been offered to them and they are amenable to consider financial settlements. However, the parties have been unable to reach agreement on the quantum of severance packages.

Mr Higgins has asked me to award costs against the Department in terms of section 138(10) of the Act on the grounds that the Department acted in a frivolous and vexatious manner by defending the dispute and by its conduct in the arbitration proceedings. I believe that this is an appropriate case to make such an order. The Department should have known from the outset that its conduct was wrongful and unfair, especially as far as the manner in which it had acted, is concerned. Notwithstanding this, it steadfastly refused to reinstate the applicants in their former positions. The Department also acted in a frivolous and vexatious manner during the proceedings in its handling of the issue of the disclosure of the supplementary report. The Minister, in contempt of a subpoena, failed to attend the arbitration or to produce the supplementary report. It was then argued on behalf of the Department that the document had not been adequately described in the subpoena for it to be identified - this after the Department had previously objected to its disclosure on the grounds that it contained private and confidential information regarding other persons. When the document was ultimately produced, it appeared that it in fact contained no reference to other persons.

AWARD

I make the following award:

The Department of Health is ordered -

-1. To reinstate Mr J. Schlebusch as Director: Medicines Registration and Registrar of the Medicines Control Council;

-2. To reinstate Ms C. Brückner as Deputy-Director: Medicines Registration.

-3. To pay the costs of Mr Schlebusch and Ms Brückner at the scale applicable in the Labour Court of South Africa.

J. Hiemstra

SENIOR COMMISSIONER