Fight over Reserve Bank Bill shareholding

…. article dated 30 September 2020….

EFF Bill states nil compensation for shares…..

Making headlines  in Parliament for all the wrong reasons is the stormy debate over an EFF private members proposal, the South African Reserve Bank (SARB) Amendment Bill.   The Bill seeks to discontinue private shareholding in the Reserve Bank with a process amounting to nationalisation and by applying a no compensation section in the Bill to acquire shares.

Despite the fact that currently shareholders have no power over Reserve Bank policy, the subject of the ownership of the 2 million shares of SARB has been the subject of a battle in the governing party for a number of years.

Now the EFF have joined in on the fray by introducing their own Bill to Parliament on the subject which to some extent seems to be trying to steal a march on the governing party.

Dusted down

The Bill was originally tabled by Julius Malema during the Fifth Parliament and which is now re-introduced was presented to Parliament by EFF’s Floyd Shivambu.  The reason for Shivambu being involved and not Malema is a technical one relating to the fact that all parliamentary committee meetings at present, even under lockdown 5 regulations, remain as joint virtual meetings of both the NA and NCOP under two chair persons. To run virtual meetings for both Houses independently was seen as impractical and too time consuming.

However, long-standing parliamentary rules exclude any party leaders from participating in meetings with the NCOP for reasons outlined in the Constitutional on the need for separation between the two houses.

Old enemies

The contentious issue in the Bill is not necessarily a question of who owns the shares, SARB itself appearing ambivalent, but that no compensation should be paid for any SARB shares.   The underlying principle in the Bill of acquiring shareholding at “nil” compensation is an anathema to the DA. They see such a proposal as an unconstitutional precedent.

The ANC is known to feel that the EFF have made a political blunder by inserting the word “nil”, which neither suits the ANC politically and also risks whole concept in one move, if rejected as the DA have suggested.  The Parliamentary Legal Advisory (PLA) service, who were called by the Joint Standing Committee on Finance have carefully distanced themselves from a final opinion on the subject.

By the rules

According to the DA, who seem confident of the fact that their opinion will stand up to any legal challenge, the Bill is constitutional nonsense anyway, in that it should never have got past the Speaker of the House. They say the Speaker is required in terms of parliamentary rules to see that a Certificate of Legal Constitutionality is issued before the Bill can even be introduced.

The PLA advised the meeting in question that at this stage will not make such a certificate available to the Speaker but carefully pointed out to MPs that their decision on the matter is based on an opinion not any  constitutional ruling.

Floyd Shivambu, for the EFF, gave the view that any Bill can be debated at working stage and demanded that any Certification could wait for the final product before it being judged.  No reference was made by the EFF of their motion to Parliament demanding constitutional clarity on Section 25 on the subject of ‘nil’ compensation.  The DA stated that again that Bill had no certificate on constitutionality and was not valid for debate.

Carry on Carrim

At this stage, joint co-chairpersons Joe Maswanganyi (ANC) of the NCOP and Yunus Carrim (ANC) of the NA agreed to let the meeting continue, Maswanganyi giving the view that he did not wish the chair to be seen as “undemocratic”.

Over a barrel

The EFF view, according to Shivambu, was that as neither SARB,  the government or the ANC as the governing party could give a good reason for the need to retain private ownership of the SARB, “the myths around  ‘nil’ compensation should be dismissed and for true sovereignty and autonomy to be expressed SARB had to be transferred to the ownership of the state.”

Shivambu further said that more than 240 central banks around the world were state-owned, whilst SA’s central bank, as one of only nine privately-owned banks, was out of place in the new South Africa.   He said, “The ownership of commercial banks and insurance companies do not reflect the demographics of South African society”.

Race card

He noted that the majority of the 800 odd shareholders of SARB were white and were non-South African citizens.  Noting that each share of the 2m shares is currently worth R10 based on the R20m issued shares and with dividends per shareholder capped at R1,000 per annum, there could be no significant benefit for shareholders other than they were holding same to cash in on a forced sale, Shivambu said.   There that could be no financial reason to leave current status quo standing, he said, since the SARB appeared disinterested.

Shivambu repeated that as the existing shareholders would undoubtedly wish for “millions in compensation and  this was neither just nor equitable”.

Walk out

The Democratic Alliance  discontinued participating at this point noting to the joint chairs that their withdrawal was on the basis that Parliament could not debate a Bill that was “unconstitutional and they could not be party to any such proposals”.

Co-chair Carrim wanted the meeting to progress on the basis that in reality the Bill’s constitutionality was not the real issue but rather how the Bill could be re-worded so that a Certificate could be issued by the PLA to the Speaker.   Co-chair Maswanganyi agreed with him that the meeting should continue.

Another try

Co-chair Yunus Carrim then commented that the Bill was only being held up because the EFF would “not tweak” the wording”.  If they did, Carrim said, the Bill would probably get ANC support and that of the PLA.  Shivambu refused point blank “to do any tweaking” and he continued to maintain that the issue of constitutionality would only come up when the Bill was sent for the President’s signature.  The ‘nil’ part of the wording on compensation was to stay, he said firmly.

The PLA advisor, when asked to conclude, said the next step in the normal progression of the Bill through Parliament was to put the the proposals out for public comment.   It was agreed that Parliament would meet to consider this possibility.

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