‘Expropriation by any other name is still expropriation’

2014-05-25 15:00

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Minister of Trade and Industry Rob Davies has called an attempt to label the Promotion and Protection of Investment Bill a land expropriation without compensation bill a “conspiracy theory”.

The department of trade and industry gazetted the bill in November. It was meant to replace investment-protection treaties and create a level playing field for all investors – local and foreign – said Davies. The bill states that any investor who suffers loss or damage from actions by the state must be given restitution or appropriate compensation.

“The bill is meant to provide security of investment to foreign investors,” said Davies.

However, policy research head at the SA Institute of Race Relations Anthea Jeffrey and senior counsel Martin Brassey called the bill “misleading” and warned that it would result in many people receiving no compensation for the loss of commercial property.

Jeffrey said: “The bill applies to property that is used as commercial property and contains a weasel clause that says certain acts don’t amount to expropriation.

“If there is a deprivation of ownership but not an acquisition of ownership by the state, then there is no compensation payable. This is the same as expropriation without compensation.”

But Davies said it is not correct to say the bill has anything to do with expropriation.

“On the contrary, it provides the right to not be expropriated without compensation.

“We have a robust Constitutional Court and we have constitutional provisions that protect ownership of property – the property clause is very tight and requires a special majority to be changed,” said Davies.

But Jeffrey said she would take the minister’s words with a “very large measure of salt” and warned that unless the bill’s wording was changed, “you will end up with nothing”.

Jeffrey was referring to a majority judgment last year by the Constitutional Court in which mining company Sebenza lost its old order mining right because it ended up in provisional liquidation.

Old order mining rights were a transitional instrument for South Africa’s switch to a new minerals regime after 2004. Private ownership of minerals was abolished and all mining companies were obliged to convert their old rights to “new order mining rights” subject to conditions including black economic empowerment.

The state took over the Sebenza mining right as a custodian. The court ruled that since the state was just the custodian and not the owner, the act was not expropriation, therefore no compensation was required.

Brassey said: “By the stroke of a pen, the power of acquisition and disposal of the minerals have been acquired by the state.” He called the Constitutional Court decision “anti-liberal” and “anti-property”.

He added that Chief Justice Mogoeng Mogoeng admitted in the ruling there had been a significant deprivation but he would not go as far as to call it expropriation.

According to the bill, if the state takes property or land as a custodian only, without acquiring ownership, then the state does not have to pay for the land or property because it does not fall under the definition of expropriation.

Jeffrey warned: “The state could gradually assume custodianship of more and more land and South Africans could find themselves dependent on state permission to occupy land.”

Davies said the bill had gone through public consultation and comments were made.

It was currently going through the parliamentary process and was not yet law.

Jeffrey and Brassey agreed that the bill’s wording needed to change.

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