Tag Archive | hearings

FICA Bill : Hearings on legal point

President Zuma vs Parliament on FICA Bill

…..editorial……The convoluted thinking that is taking place in South Africa to avoid the consequences of the law has once again become evident in the ongoing battle between the Presidency and the Standing Committee on Finance with the return  of the Financial Intelligence Centre Amendment (FICA) Bill  by the President to Parliament and therefore unsigned into law.

Worried by warrants

The President claims that for representatives of the Financial Intelligence Centre (FIC) to visit business premises and even homes under special circumstances without a search warrant and in cases where obtaining a warrant would defeat the purpose of the search, may be unconstitutional.   FIC, meanwhile, has confirmed in Parliament that between the years 2011 and 2016, 930 warrantless searches with the consent of those searched had been carried out by its inspectors.

Rare happening


The move
by the President, after five months of inaction, has now forced Parliament to seek the opinion of senior counsel to reinforce their views that warrantless searches are indeed acceptable in terms of the Constitution.   The FICA Bill was originally recommended for signature into law and sent to the President by no lesser body than the National Assembly, then concurred to by the National Council of Provinces, both on the advice of Parliament’s own legal counsel on constitutional issues.   This is normal procedure with every piece of legislation.


This reason for further delay on the President’s part must have raised a few eyebrows at the Organisation for Economic Co-operation and Development (OECD) centre in Paris.     As those in financial circles are aware, the Bill was tabled by the Minister of Finance with the objective of not only aligning South Africa’s banking and financial institutions with global financial advances but to counter growing and localised corruption and money laundering.

Hurry up and wait

This august body, the OECD, much maligned by the Minister of Mineral Resources in tandem with his opinions on the SA banking system, is currently awaiting South Africa’s confirmation that it will comply with the latest round of requests for compliance with the fourteen rules, now amended, to counter international financial terrorism and extend the OECD’s ability to combat international money crime.

Warrantless searches are allowed in most major countries where compliance with OECD conditions are sought but in the same countries, as has been worded in the FIC Bill, the circumstances to allow this only in cases of suspected money laundering are specifically worded and this includes cases where the application for a warrant or a delay in obtaining a warrant would remove the element of surprise.

Treasury wanted immediacy

The request for South Africa to conform is more specific in terms of the requirements of the Financial Intelligence Task Force (FATF), better known by banks as the criminal investigation department of OECD.    A date for compliance was set by them in February 2017 and agreed to by South Africa. The banking sector is ready to implement the new rules both in staffing terms and with systems and procedures waiting. Minister Pravin Gordhan and some senior ANC party members have been vocal with their suspicions for the delay.

Mystery motives

In what appears to be almost Machiavellian in political terms, the President, with the knowledge that he must have that Parliament was about to close for business, might, according to some MPs, have lodged his further objections to the Bill in the hope that further support for his views could be garnered from subsequent hearings, submissions and more debate.

Chair of the Standing Committee on Finance, Yunus Carrim, countered the President’s unexpected move by cancelling urgent meetings on the Insurance Bill, scheduled for debate and hearings on the last two days of parliamentary business, and called for an urgent meeting of his Committee.  

Advocate Frank Jenkins, Parliament’s legal adviser, was asked to attend and give opinion, together with manager of FIC, Pieter Smit.   Also attending was the Deputy Minister of Finance, Mcebisi Jonas and National Treasury deputy DG responsible for FIC matters, Ismail Momoniat.

Carrim firm on subject

Adv. Jenkins confirmed the sections of the Constitution provided for a Bill to be returned but only once and on specific issues.  He saw the President’s action as unusual in that a Bill, worked on for two years with every clause scrutinized and with input from constitutional experts, could be returned at such a late stage with so much time having elapsed during which an objection could have been easily submitted.

He then explained to MPs how the Constitution does indeed allow for warrantless searches in terms of the Constitution’s specific wording on the subject matter. He listed six precedents of Bills passed into law recently where warrantless searches are allowed in certain prescribed circumstances in terms of the Constitution.   He said this was not a complicated issue at law in view of precedent.

No good choices

Chair Carrim said he had no choice but to treat the FATF issue as the least worst of bad scenarios and he was forced to apply parliamentary rules to the issue in order that the President’s move could be countered with indisputable legal fact and by applying parliamentary rules objectively and strictly. He wanted to observe protocol so that the matter could become “de-politicised”.  

He said the media had called him “brave” to stand in the way of the President’s obvious wish.   This was not the case, he said, but just a matter of following the rules and respecting the fact that Parliament was the final arbiter in such matters since Parliament represented each and every citizen of South Africa.

The response

The rule, Adv. Jenkins explained to the Committee, was that should a Bill be returned to Parliament by the President, having been beforehand approved by the House on every issue in the Bill, then only the specific point, i.e. warrantless searches, could be discussed and debated subsequently and altered if seen fit. This was stated in the Constitution.   The Bill could then be returned to the President with Parliament’s view on the subject matter alone.

He said that should the Committee decide that the President’s view was a baseless argument then they could probably avoid the President referring the matter to the Constitutional Court with further long delays by supplying advice from counsel.  Chair Carrim agreed with this suggestion and with Committee approval across all parties the call for legal submissions in the form of submissions in the New Year and the matter down for hearings and debate in Parliament after it opens in February/March 2017.

Hands off the Bill

Parliament could then return the Bill to the President, Carrim explained, with full legal constitutional opinion and throughout the whole process, only the issue at hand, i.e. warrantless searches, would be allowed for debate.   No other substantive issues could be raised, debated or voted upon as the Bill had been approved by Parliament, Carrim said, and only one issue was under scrutiny.

He said, this would be clearly advertised when calling for submissions and the Speaker asked to observe the rule in any subsequent National Assembly debates.  Any other comments and observations would be regarded as irrelevant.  As far as the OECD was concerned, this was a risk that Treasury would have to handle in their meetings with OECD but this route, Yunus Carrim felt, was the better option.

Believe it or not

For the five months that President Jacob Zuma has been refusing to sign the Bill into law
and refusing to give any reason other than finding the time to “apply his mind to the issue”, any amount of publicity on the need for speed must have landed up on the President’s desk
, even if  just legal advice on the subject instructed by the President.   Lying to Parliament has now become a presidential practice, cartoonists Jonathan Shapiro, Neale Blandan and Jeremy Nell having turned President Zuma’s relationship with Parliament into an art form. 

The “G” factor

As far back as 2009, the OECD published a list of countries divided into three parts, all depending on how or whether they complied to “internationally agreed tax standards”, in select jurisdictions, tax havens or other financial centres of interest and whether they had implemented appropriate legislation in line with OECD requests.   

The procedures are now part of standard international banking procedure but now relate specially to identifying money movements of “prominent persons” and where money laundering seems possibly to be evident.

Whether the President, as the most elevated and “prominent person” in the country, might be trying to protect himself or other “prominent persons” including friends and associates alike against investigation into money movements is not, however, the main issue.

All suffer

The far more serious issue is that the President’s seeming neglect in responding for months has exposed the country’s banking and financial systems to risk.  This is quite outrageous.  The President may or may not have a good argument that it is constitutionally inviolate for the FIC to search without a warrant and possibly with or without warning beforehand  but it seems a stretch of the imagination, given his track record, that he is morally indignant.

Parliament has now issued a gazette calling for comment with the following proviso: “All submissions must therefore only deal with the constitutionality of section 45B (1C) dealing with warrantless searches in clause 32 of the Bill.     As the hearings are on the constitutionality of warrantless searches, those making submissions are requested to provide legal opinions for their arguments if possible.  No consideration can be given to submissions dealing with any other provisions of the Bill.”

Hearings are promised as well in mid-March 2017 for  generalised input on the legislation, part of Chair Yunus Carrim’s call for Parliament to investigate “transformation in the financial sector.” 

 

FIC Bill hold up goes to roots of corruption – ParlyReportSA

Red tape worries with FIC Bill – ParlyReportSA

Madonsela: state capture and corruption linked – ParlyReportSA

 

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SA’s COP21 climate change paper debated

sent to clients 13 October….

All on climate change but not cost…

cop21 logoAlmost always ignored at the recent parliamentary public hearings on the SA COP21 climate change submission was the issue of finances, probably the essential ingredient that should have been debated as part of South Africa’s position in the forthcoming  conference in Paris on intended targets for reduction of greenhouse gases.

After two full days of submissions, with no time for committee member questions from MPs in the light of time restraints and the re-presentation of papers in Xhosa, an impression was gained that there remained the same sharp divide between the providers of statistics that clearly showed what a future world would look like if South Africa and other countries continued on existing paths and those who called for reality in the light of the fact that South Africa is a coal-based economy and will remain so well into the mid-century.

State developmental call only

Surprisingly costs to the tax payer and to business and industry featured little in the proposed department of environmental affairs (DEA) COP22 submission, other than by emphasing the point by investing sooner was a more advantageous position to be in than later, when the cost of “catch up” would be far greater.

The submission is to be South Africa’s call on implementing their portion of 2015 COP agreement from its Green Climate Fund and which reserve fund is supposed to be capable of mobilising $100bn from 2020 onwards.  Also to be resolved is the issue of the immediate sources of funds and to capitalize into reality for use what already exists in the fund.

Maverick viewpoint

The one person who did approach the issue of funds but who fell into the category of a “denialist”Phillip lloyd according to environmental observers, was Prof. Phillip Lloyd of the Energy Institute, Cape Peninsular Institute of Technology, a known detractor of climate change. 

He claimed that in fact climate change issues represented a massive multi-billion industry with a potential turnover of R1,174bn. It was staffed by thousands of NGOs around the world, he said, employees of sensitive international companies, whole government departments and enormous amount of diverted funds that could be put to better use.

He claimed that the current warnings on climate change and “doomsday scenarios” were largely based on unsubstantiated statistics, or at the very least, exaggerated claims. Such funds should be diverted to development, not wasted on pointless conferences, he stated, and technologies that could not hope to meet the demands of growing populations.

Fact or fiction

He showed a graph of rainfall records for England and Wales going back to AD 1750 which indicated a mere 4% rise over the entire period and whilst indeed CO2 emissions , according to him, had increased alarmingly affecting health this was in no way connected to climate change because temperatures had only increased 1%, part of a long process of global warming that went back to the globe’s emergence from the last Ice Age.

Similarly, he noted, rising sea levels had been going on for “thousands of years” but the current level of annual sea rise was dropping in terms of archaeological and geological studies conducted, again over the centuries. He said that the current spend globally on the whole so-called climate change awareness programmes and infrastructure spend amounted to some R15,500 per person globally and “sooner or later this hype had to come to an end”, he concluded.

The chairperson thanked Prof. Lloyd with a sense of amusement.

Developmental help

gridsAnother issue raised regularly regarding the DEA COP 21 submission hearings was the call for capacity building to handle new clean energy resources, a major problem in many developing countries. Financial and technology mechanisms had to be shared and adapted wherever possible, particularly in countries where forced change would stunt economic growth, the paper before them stated.

Most submissions focused on the fact that the two issues had to be in harmony but few could expand how this could be achieved successfully, some submissions just taking the “green at all costs” approach. Nevertheless, in broad terms, all submission except the one acknowledged the urgent need for some sort of structured approach to the agreed need for climate change programmes.

Most submissions also made reference to the activities of Eskom or Sasol in one way or another, referring to such in one case as “the primary polluters in the South African context”.  Subjects brought up varied from fracking to small enterprise farming and renewable energy supplies to carbon capture.

In the one corner….

Greenpeace maintained that listing nuclear energy as “low-carbon” option was disingenuous in that Greenpeacenuclear life cycle in itself was carbon intensive and should not be referred as an energy component for clean renewable alternatives and preferably removed altogether.  

Other predictable submissions came from such bodies as Earthlife Africa and the World Wildlife Fund, who specifically named fossil fuels as the major problem, one of the few times vehicle fuel emissions were mentioned in the two days.

COSATU complained that the use of nuclear energy did not create jobs and would not help the economy in any way but did raise the issue that the effect of global warming was a fact and would be ”devastating as far as employment was concerned”.

The legal view

The Centre for Environmental Rights (CER) stated that South Africa’s negotiating position at COP 21 should succeed in giving effect to section 24 of the Constitution regarding the right to health but they complained that DEA’s long term plans, which included accommodating coal-fired power generation and its highly water-intensive processes had no hope of meeting constitutional requirements unless urgent changes were made.

They pointed out that aside from Medupi and Kusile, the Minister of Energy’s plan to procure an additionalmedupi 2500MW of coal fired power included seven further coal-fired plants yet to be built and which were in the planning stage, mostly in Limpopo and Mpumalanga. Both these provinces, CER said, were highly water stressed areas and had zones already declared as health priority areas due to poor air quality.

Even the right of access to drinking water was threatened in these areas, they pointed out, both issues, air pollution and lack of drinking water in their view representing potential breaches of constitutional privilege.

Top down problems

A number of interesting submissions were made on the problem of local government implementation of climate change mitigation plans.    A particularly important submission came from SA Local Government Association (SALGA), who pointed to the fact that whilst climate change was a national issue and called for a national approach, this did not change the fact that implementation and controls, regulations and planning mostly had to be done by cities and municipalities.

SALGA said there seemed to be no cohesion either in funding or in policy between national government and to some extent provincial government, but certainly not with local governmental authorities. They called for an “enabling framework” that could be adopted in key localised areas and so that “the voice of local government could be heard” by those paying for it.

Methane and fracking

A scientific paper known as the Howarth Report, emanating from Cornell University, was presented by a private individual, Marilyn Lilley, which focused on hydraulic fracturing and the greenhouse gas footprint left by this fracking drilling, the Howarth Report specifically focusing of fracking in the United States of America. Ms Lilley related these findings in her presentation with that of the 200,000sq km area released for fracking ventures in the Karoo.

A quick read of the Howarth Report indicates that in the US during the life cycle of an average shale-gas well 3.6 to 7.9% of the total production of the well is emitted as methane gas. This is at least 30% more and twice the harmful effect as gas extracted from conventional oil wells, the report says.

Also there is a 1.4% leakage of methane during storage and transmission of shale gas. This is the far the most dangerous component of greenhouse gases, the average black smoke emitted from a factory containing on the whole mainly harmless soot, the report concludes. Ms Lilley said that methane was “enemy number one”, adding again that methane had a far greater effect on global warming than any amount of coal fired energy generation.

Methane spouts

Fracking_GraphicShe also said that during the hydraulic fracturing stage of a drilling, which would go to at least 3-4kms vertically to a shale layer and then for approximately 2kms horizontally along the seam, fracturing then takes place with explosives and some 20 million litres of water with silica sand and chemicals pumped in to cause the methane gas to return to the surface with the then toxic water.

She said well pads are usually built 3-4 kms apart in a grid formation and each pad can have up to 30 wells, each being capable of being fracked a number times and each frack taking about 20 million litres of water.

She concluded that fracking whilst be making an unpleasant major contribution to greenhouse gas emissions, the process rather contributed more to global warming which was the actual root problem. She called for fracking and consequent methane gas emissions to be accounted for in South Africa’s COP 21 submission as a subject in itself and for a moratorium to be declared on fracking exploration and subsequent gas extraction.

She also pointed to the fact that disposing of the then toxic water extracted, in some cases needing irradiation, would become an immense and unmanageable waste problem and the light of the distances involved in the South African scenario.

Agri-plans and consequent food processing development

farmingA considerable number of submissions focused on the importance of establishing viable small farming units and a completely self-sustaining mini-agricultural food industry in specially located zones. The proposers suggested suitable cropping of vegetables and staple foods in order preserve the food chain for poorer communities under climate change conditions, the zones themselves contributing to healthier emissions with normal synthesis.

Carbon capture investigation

The South African National Energy Institute (SANEDI), reporting to the Central Energy Fund, gave a report- back on their work in the South Eastern Cape where a pilot drilling project, carried out on-shore for reasons of cost, was exploring the possibility of large-scale carbon storage at sea.    Prof. AD sanedi carbon capSurridge described carbon emissions capture as part of the “weaning off process necessary” whilst the country moved slowly from a fossil fuel based economy to a renewables/nuclear mix.

This pilot storage plant should be running by 2016, SANEDI said, and “commercial rollout possibilities concluded by 2020”.

Marathon run

In closing, Jackson Mthembu, chairperson of the Environmental Affairs Parliamentary Committee, said that “in South Africa, we are known for differing with respect”. This had been the purpose of the hearings, he pointed out.

He concluded by saying that climate change, as an issue, cut across all facets of government and consequently the parliamentary submissions collective summation would be shared across the desks of all Ministries involved.

Other articles in this category or as background

Environmental pace hots up – ParlyReportSA

Tougher rules ahead with new evironmental Bill – ParlyReport

Electric cars part of climate change response – ParlyReport

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