Robbed as they sat on their hands
FROM the end of April, companies will be able to include in their new memoranda of incorporation the power to seize shares held by a shareholder whom they have been unable to trace for a reasonable period of time.
But that suggests the extinction of property rights, and can probably be classed as expropriation.
This raises, again, the sanctity — or otherwise — of property ownership, an element fundamental to the development of all the great constitutional democracies. We have been fiddling with property ownership ever since the 1996 constitution was introduced, not always with happy outcomes.
The single worst case was the promulgation of the Mineral and Petroleum Resources Development Act (May 2004) which threw overboard the 1991 Mining Act and vested ownership of minerals in the state. Did this amount to expropriation? This is important because expropriation under certain circumstances, such as in the public interest, may be tolerable, but would require compensation. Yes, it was expropriation, said the North Gauteng High Court. No, it wasn’t, said the Supreme Court of Appeal. And now we are waiting for the Constitutional Court to arrive at a conclusion.
Especially interesting about this action by the state was that the mining houses did nothing to protect ownership positions many would have thought inviolate. They sat there like dummies. Why? Were they fearful that they might antagonise the all-powerful African National Congress? Were they terrified that then-president Thabo Mbeki might have a rant?
However this might be viewed, whatever compelling arguments might be advanced, it is incontestable that their failure to protect the property of their shareholders was a disgrace and a dereliction of duty. It opened a Pandora’s box, and closing it again may be beyond possibility. The CEs and boards at the time have a great deal to answer for.
The case pending in the Constitutional Court was brought by Agri SA, which bought the rights to mine coal in two Mpumalanga properties and lodged a claim for compensation on the grounds that its coal rights had been expropriated. Constitutional courts everywhere, notably in the US, often exhibit a strong political bias. I don’t suppose ours is any different. But in arriving at this particular decision on expropriation, I do hope our court will avoid indulging in a series of amazing gymnastic revolutions accompanied by hyperbole deserving of rare acknowledgement.
We need to step back and agree that expropriating rights for a sound public purpose or public interest is entirely acceptable. But it must be accompanied by fair compensation for those deprived of this property. If this does not apply, then it is not normal. It is an exception and needs to be dealt with through the application of careful scrutiny. Twisting legal history and employing the contortions of an exaggerated sophistry will not do.
There are strange things happening here. BDlive reports that the Foreign Investment Bill is now far advanced, and its purpose is solely to enable Trade and Industry Minister Rob Davies to get on with severing those bilateral investment treaties which currently prevent this government from behaving like a thief in the night. The purpose of those investment treaties was to protect companies from expropriation or nationalisation — except for a public purpose and on a nondiscriminatory basis, and "against prompt, adequate and effective compensation".
I have said it previously and will go on reminding readers that Davies and other Cabinet ministers are dyed-in-the-wool communists, subscribing to a bankrupt political ideology that has never embraced either property ownership or idle notions such as democracy.
The primary purpose of the Constitutional Court is to protect South Africans from unconstitutional developments. In its wisdom we shall have to trust.
THE Johannesburg Philharmonic Orchestra, currently in business rescue, owes about R20m. The bulk of that, R6.9m, is owed to the South African Revenue Service for unpaid taxes and levies, while R4m is owed to employees. The orchestra earned R7m from various sources in financial 2012 and spent R20.2m. Like Wilkins Micawber in Charles Dickens’s famous novel, David Copperfield, it lived "in optimistic expectation of better fortune".
Sikkie Kajee, appointed to oversee the orchestra’s rescue, has uncovered some fascinating stuff. For example, that the orchestra asked the National Lotteries Distribution Trust Fund for a grant of R21.2m in April 2011 and has since received no further word. In fact, Kajee has established that the Arts & Culture Distribution Agency did not have a quorum for several months until September last year and is now battling through an extensive backlog.
Two broad scenarios could unfold. The first is that the orchestra fails to get any grants, or that these are given on such onerous terms that the only option is liquidation. The second is that it gets sufficient sponsorship, which, together with ticket sales, covers the cost of each season with a modest surplus to be applied in addressing debt.
Applying this alternative, made possible because Anglo American has provided a one-year-only sponsorship of R1m, allied to a modest symphony season of two concerts a week for four weeks only, might just work.
But it makes some assumptions cynics will think pie in the sky: ticket sales of R800,000; corporate sponsorship of R1m a year; musicians getting paid R3,500-R4,000 a week; creditors accepting a moratorium on debt (best case: get paid in five years; worst: get paid in 19 years); creditors holding R5.3m abandoning their claims (those with R3.1m have come to the party).
The Distributing Agency for Arts, Culture and National Heritage is the body through which the National Lotteries Board distributes money. It was this agency that gave R40m to the National Youth Development Agency for that disgraceful World Youth Festival, which blew more than R100m in an orgy of catering, accommodation and transport disasters.
And guess who the National Lotteries Board reports to? Yep. Trade and Industries Minister Rob Davies is our man.