Private security sector sounds the alarm on bill

2014-03-23 14:00

The world’s leading suppliers of security technology will have to withdraw from South Africa or give up control of their South African subsidiaries because of legislation President Jacob Zuma is about to sign into law.

The legislation was a violation of South Africa’s bilateral trade agreements and would in all likelihood result in yet another complaint at the World Trade Organisation, said representatives of the private security industry.

The law, the South African Private Security Industry Regulation Bill, along with other so-called election laws, was rushed through Parliament in the first week of March and is now awaiting Zuma’s signature.

The industry, which employs 445 000 people and is one of the country’s major employers, is urgently lobbying for the legislation to be scrapped. It affects companies like ADT, Chubb and G4S.

The ownership clause requires all foreign companies in the security industry to be 51% South African owned. The definition of a security company has also been extended to mean all suppliers of security equipment.

This means that international IT giants in the security industry like Bosch in Germany, Sony and Panasonic in Japan, Honeywell in the US and Samsung in Korea will have to sell their South African subsidiaries or give up control of them to South Africans.

The importance of intellectual property in the industry will probably make them more inclined to withdraw from the country than to sell their subsidiaries.

Of the companies that offer armed response services and security technology, ADT has 10 500 registered security officers in its employ in South Africa and Chubb has 2?358.

Minister of Police Nathi Mthethwa is the driving force behind this controversial amendment. He said in Parliament it was necessary to limit foreign ownership of private security companies because the dividing line between private security companies and private military companies was becoming increasingly vague.

“Private security companies are also being used increasingly in the intelligence field. There is also concern because international security companies have no good record as far as human rights violations go,” Mthethwa said.

Steve Conradie, CEO of the Security Industry Alliance, an umbrella body for the industry that provides employment to about 445 000 registered security officers, urged Zuma on Friday to reconsider the ownership clause.

Mike Schüssler, CEO and owner of, said the private security industry was one of the few industries in the private sector that actually created jobs and an extremely negative message was now being sent to the outside world in this regard.

“They were the biggest creators of jobs in the past decade. And it’s also work created for low-level or even entry-level workers and young people.

“We don’t like to say it, but it really is a successful industry in South Africa, and we are now sending completely the wrong message to foreign investors about it,” Schüssler said.

“There is also no doubt that the legislation is a violation of the country’s international trade agreements. It’s fairly certain that it will lead to further complaints against us at the World Trade Organisation – again a negative message to foreign investors.

“One must also remember that foreign investors in our security industry have made direct, long-term investments in our country.

“That’s buildings, equipment and service contracts – investors who have committed themselves to South Africa,” Schüssler said.

Conradie said the ownership clause was not in the original bill on which the security industry made submissions to the parliamentary portfolio committee.

“It was slipped in at a late stage in November last year. We then made special appeals to the portfolio committee, but they were ignored.

“We have now made written representations to President Zuma, but we have received no indication whether he will reconsider the ownership clause,” Conradie said.

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