Submission to the minister of police on the private security industry regulation amendment bill


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SUBMISSION TO THE MINISTER OF POLICE ON THE PRIVATE SECURITY INDUSTRY REGULATION AMENDMENT BILL

2012

Contact details:

Charlene Louw

1 Charles Crescent

Ext. 8

Sandton

2146

Email: cklouw.za@adt.co.za

Tel: 011 321 4707

1. INTRODUCTION
These comments are furnished by ADT Security (Pty) Ltd (“ADT”) following the invitation for comment on the Private Security Industry Regulation Amendment Bill, issued by the Honourable Minister of Police, Minister Mthethwa, to the public during September 2012. The aforesaid Bill will hereinafter be referred to as “the Bill”.
ADT commends government for the proposed Bill, notably in respect of funding, a separate database on firearms issued to security service providers, the promotion of crime prevention partnerships, the accountability of the Private Security Industry Regulatory Authority (“PSIRA”) and private security companies. ADT does however have concerns about certain specific aspects of the Bill which we believe are ill-conceived and if implemented will have severe consequences on the South African economy as a whole, job creation and the fight against crime.
On a more practical note we contend that certain provisions of the Bill seem not to be aligned with other existing legislation or government policy. Some of the wording of the proposed provisions lacks clarity and may quite plausibly contribute to legal uncertainty if not aligned to existing legislation. In our comments on the Bill, we provide suggestions on additional amendments that might be considered and also provide comments on certain of the proposed provisions we deem to be problematic.
2. DEFINITIONS
2.1 The definition of “security service”, particularly with the substitution of section 1(h) is too broad, in that it extends regulation to industries such as the information technology industry, distributors, resellers, freight forwarders and similar transportation agencies that already have a wide range of statutory regulations governing their operations. The definition as amended may have the result of overburdening the PSIRA, an entity which in our view appears to be already stretched in its mandate, and unable to effectively regulate the industry.
3. LIMITATION OF FOREIGN OWNERSHIP
3.1 Section 20
20(2)(c)

The criteria in section 20 are obviously meant to reduce the entry of what is considered to be ‘unsuitable’ persons into the industry and to deter unscrupulous companies. However, the insertion of paragraph 20(2)(c) in particular, is contrary to the commitment that the South African government has to maintaining an open environment for investment. This is core to long-term, sustainable, economic growth. As a developing economy, South Africa needs to attract foreign direct investment in order to support domestic investment financing requirements. Furthermore, the PSIRA Act 56 of 2001 restricts registration as a security officer to citizens; it is therefore inconceivable that citizens would place foreign interests before local interests, and the perceived threat to national security because of foreign ownership is not a credible.
Given the aforesaid, it is our view that this proposed insertion of paragraph 20(2)(c) should be retracted because it is irrational and does not do the economy of South Africa any justice.
20(2A)

Notwithstanding our objection to limiting foreign ownership in the private security industry, our concern with this provision is the absence of the percentage to be determined by the Minister. In this regard we suggest that clarity be provided to all stakeholders on the envisaged percentage to be determined. Not doing so is in our opinion irresponsible and does not support rational, sustainable legislative measures aimed at ensuring improved regulation of the industry and fair treatment of industry participants.
20(6)(a)

The provision of section 20(6)(a) is far too restrictive in terms of the period within which private security companies must comply, in that this requires significant divestiture, which cannot practically occur within 5 (five) years. If the amendments proposed in the Bill are adopted, foreign and juristic shareholders of security businesses will be required to sell their shares within a five year period in order to ensure that the businesses are 51% owned and controlled by South African citizens. This would constitute a forced sale of shares and, given that the sale will be made at a time when the market would be aware that the foreign shareholders of private security companies are forced to divest their shareholding, it is unlikely that such shareholders would receive a fair market value for those shares. In the circumstances, the forced sale at a less than fair market value of the shares would constitute a deprivation of property, and may quite possibly fall foul of the provisions of section 25(1) of the Constitution.
3.2 Section 23
23(7)

We contend that the discretion of the Minister to exempt any person in respect of certain categories of a security service from the exclusion in subsection 23(1)(a) or (6) does not support fair treatment of industry participants. Furthermore, the Bill provides no clarity as to the circumstances in terms of which a security service provider would be exempted. In this regard we suggest that the term “on good cause” be given content to provide the necessary clarity.
3.3 Violation of Multiple Trade Treaties and Agreements
We assert that the provisions of section 20 limiting foreign ownership will violate a number of existing trade treaties and agreements. We have highlighted certain of these key trade treaties and agreements below.
Violation of General Agreement on Trade in Services (GATS)
The General Agreement on Trade in Services (GATS) is a treaty of the World Trade Organization (WTO), and South Africa is a member state and signatory thereto. Under Article XVII(1) of the GATS, member states are obliged to “accord to services and service suppliers of any other member state, in respect of all measures affecting the supply of services, treatment no less favourable than it accords to its own services and service suppliers”.
Article XVII(3) of the GATS provides that “formally identical treatment or formally different treatment shall be considered to be less favourable if it modifies the conditions of competition in favour of services or service suppliers of the member compared to the like service or service suppliers of any other member”. A member wishing to maintain any limitation to these requirements of Article XVII must reflect those limitations in the third column to its Schedule of Specific Commitments to the GATS. What this means is that a member state, such as South Africa, may stipulate in its Schedule of Specific Commitments, that it will limit the conferral of equivalent national treatment to certain services (for example, the investigation and security service, which is sector CPC 873 of the Schedule to the GATS). South Africa has not indicated any limitation to the provisions of Article XVII in respect of investigation and security services under its Schedule of Specific Commitments. As a result of this, South Africa is bound to provide treatment not less favourable to foreign providers of security services in the country.
Violation of the Europeon Union and South Africa Trade, Development and Co-operation Agreement (TDCA)
The European Union, through its delegation, has partnered the South African Government in its pursuit of a better life for all its people. The relations between the two parties are governed and impacted upon by a number of Agreements, Protocols and Papers, one such Agreement being the Trade, Development and Co-operation Agreement (TDCA). Article 100, titled “non-discrimination”, states as follows:
In the fields covered by this Agreement, and without prejudice to any special provisions contained therein;

(a) the arrangements applied by South Africa in respect of the Community shall not give rise to any discrimination between the Member States, their nationals, or their companies or firms;

(b) the arrangements applied by the Community and the Member States in respect of South Africa shall not give rise to any discrimination between South African nationals or its companies or firms about investment promotion and trade development between the two parties, and how EU will support, through appropriate instruments, the promotion and encouragement of investment in South Africa and in the Southern African region”.
Violation of the Bilateral Trade Agreement between the United Kingdom and South Africa
This agreement between South Africa and the United Kingdom (“UK”) obliges the South African government not to “impair by unreasonable or discriminatory measures the management, maintenance, use, enjoyment or disposal of investments in its territory of nationals or companies of” the United Kingdom or “treatment less favourable than that which it accords to its own nationals or companies.” Moreover, the investments from companies of the UK “shall not be nationalised, expropriated or subjected to measures having effect equivalent to nationalisation or expropriation.”
In 2001, a similar attempt at limiting foreign ownership in the private security industry was made, and it was met with resistance by the UK Government and the industry resulting in the proposal being withdrawn. It is puzzling that there would be a similar attempt at limiting foreign ownership in the industry given the history in this regard.
4. REGULATIONS
4.1 Section 35
35(IA) and 35(sA)

We contend that the discretion of the Minister in section 35(lA) and 35(sA) should be better qualified, cognisance being had to the purpose of the regulations to inter alia promote an orderly private security industry. It is therefore our request that guidelines governing the Minister’s discretion in this regard be developed with the input of all stakeholders involved.
4.2 Section 36
36(3)

We support the proposed addition of section 36(3); however we are concerned that this addition may be impractical given the administrative challenges faced by the Central Firearms Register and the lack of a credible firearms register.
We are further concerned that this addition does not clearly define a process which ensures that information on the database is provided to PSIRA not only “at the written request of the director”. Specifically defining a process that enables PSIRA to exercise its regulatory authority effectively is important; we therefore propose that section 36(3) be strengthened.
It is important that PSIRA as a regulator develops structured and documented regulatory processes, procedures and instruments in this regard.

4.3 Section 38A
38A(1)(a)

An immediate concern with this proposed provision contained in 38A(1)(a) is that there is no indication of the information required and the prescribed time limits. We suggest that clarity be provided to all stakeholders in this respect.
A further concern with regards to the proposed amendment to this section is the additional administrative burden imposed on industry participants; leading to unnecessary administrative cost and effort.
5. CONCLUSION
It appears to us that this Bill is obstructive to an effective and necessary industry, with one of the key objectives being to place limitations on the foreign ownership and control of private security businesses in South Africa. This appears to be in conflict with South Africa’s international trade relations, the Constitution and may well be in conflict with the requirement for equality of treatment of foreign nationals in that foreign nationals are effectively excluded from participation in the industry by virtue of citizenship.
Private security personnel have the same powers as ordinary citizens, drawing most of their powers from the law of contract, the law of property and labour law. They are only ‘authorised’, to make citizen’s arrests, banish trespassers and deny entry, and search personal property by virtue of their status as agents of property owners, and employers. It is therefore possible to hold the private security industry accountable for unlawful or excessive actions or at least use the court system as an avenue for oversight. It is simply unjustified therefore, that these services, or the involvement of foreigners in the industry, are threats to state security.
We believe a far more business friendly approach needs to be taken by the Ministry of Police. It is hoped that the Ministry will lend serious consideration to South Africa’s international obligations, constitutional parameters, and all submissions received before the Bill is enacted. Furthermore, we believe that a full Regulatory Impact Assessment must be undertaken to determine possible impacts on the industry and the economy.
It is ADT’s considered opinion that the Bill should be withdrawn in totality in order to have it reworked and re-assessed with the benefit of the input of all relevant stakeholders, alternatively that the provisions proposed by the Bill, which are aimed at effectively declaring foreign ownership in the industry prohibited, should be withdrawn in totality.

6. REQUEST

ADT would be pleased to make verbal representations to the Honourable Portfolio Committee on Police at the date of the public hearings to be conducted on a future date or when otherwise requested.


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