SA Reserve Bank Amendment Bill: EFF MP Shivambu & Parliamentary Legal Advisor briefing

Meeting report

Co-Chairperson Maswanganyi welcomed all members and officials from Parliament. An apology from the Standing Committee on Finance was noted in respect of Mr G Hill-Lewis (DA). The Select Committee of Finance did not submit any apologies on behalf of its members.

Co-Chairperson Maswanganyi explained that the purpose of the meeting was to get a briefing from Mr Shivambu on the proposed Private Members Bill - South African Reserve Bank Amendment Bill and for members to ask clarifying questions. The Bill would be treated like any other Bill as set out in a 2012 Constitutional Court judgement:  Mario Ambrosini, MP v Maxwell Sisulu, MP Speaker of the National Assembly case CCT 16/12. The Bill would be made available for public hearings. Members of Parliament (MPs) should not pre-empt the position of the public as this would make a mockery of public hearings. Discussions would follow after completion of the public hearings. Party mandates were not a point of discussion at this stage but would be debated when the Bill reached the National Assembly.

Co-Chairperson Carrim confirmed that the purpose of the meeting was adequately explained by the Co-Chairperson. He stated that although it was a Private Members Bill, the effect would be the same.

Co-Chairperson Maswanganyi said that the Bill was tabled in 2018 by Mr Malema. It was one of several Bills that was carried over from the Fifth Parliament.  It should not matter by whom the Bill was introduced. The merits and demerits of the Bill should be considered.

Mr D Ryder (DA) raised his concern about the inclusion of the Select Committee in the process. He suggested that a platform was been given to introduce an unconstitutional Bill.

Co-Chairperson Maswanganyi emphasised that the element of constitutionality was not applicable at this point. In terms of the 2012 Constitutional Court judgement, a member had the right to introduce a Bill. The Committee consulted with Legal Services on the matter before the meeting.

Mr Ryder disagreed and referred to the opinion of the Legal Advisor who made the point that the Bill was illegal. The NCOP should therefore not be involved and he requested to be excused from the meeting.

Co-Chairperson Maswanganyi reiterated that Mr Shivambu was only going to introduce the Bill. Public submissions would follow and Mr Ryder would have the opportunity to mobilise against the Bill. The process would not be short circuited.

At this point, Mr Ryder excused himself and ended his participation in the meeting.

Mr W Aucamp (DA) agreed with Mr Ryder and expressed his reservations about the involvement of the NCOP at this stage of the process. It was clear to him that sinister dealings were at play.

Co-Chairperson Maswanganyi questioned why the constitutionality of the Bill was being raised at this point. He assured members that the Bill would go through the proper channels and whatever decision was taken in the end, no process would be short circuited. MPs would get the opportunity to explain the Bill to the public.

Co-Chairperson Carrim said that if the process was unconstitutional then it would also apply to previous briefings. He referred to similar processes that were followed with the Disaster Relief Bills. He telephonically confirmed with the State Lawyer that the process was not irregular as no decisions were being taken. It was not a policy, but a legal matter. The DA was looking for an excuse and they should take the matter to court.

Mr Aucamp replied that the DA always won cases when they went to court. He repeated that the NCOP should not be part of this process.

Co-Chairperson Maswanganyi asked Mr Shivambu to proceed with his presentation.

Presentation on SARB Private Members Bill

Mr F Shivambu (EFF) thanked the Chairperson for the opportunity to present the Bill to the Standing Committee of Finance. It was the right of MPs to introduce legislation and it was not unconstitutional to amend the Constitution. The procedure was that once a Bill passed the NCOP process, it was sent to the President for his signature. MPs who were unhappy could take the matter to the Constitutional Court. The aspect of ownership of the SARB was the focus of the presentation.

More than 240 Central Banks around the world were state-owned. The SARB was one of only nine privately-owned banks. In addition, ownership of commercial banks and insurance companies did not reflect the demographics of the South African society. This amendment was a logical step to have a Central Bank owned by the state and with the state as the sole shareholder of the SARB.

The majority of the 802 shareholders were white and non-South African citizens. The aim of the proposed amendment was to take the shares from the existing shareholders and distribute it to the 57million South Africans.  Each of the 2 million shares is currently worth R10, totalling R20million of issued shares. Dividends per shareholder were capped at R1 000 per year meaning that there was no significant benefit for shareholders. A claim of billions in compensation to private shareholders would therefore not be just and equitable.

The goal with the amendment was to protect the bank so that it was not abused as is the case with some of the State-Owned Entities. For public purposes and in public interest, the shares should be taken without compensation. Mr Shivambu concluded that there was no need for private ownership of the SARB and that the myths around compensation should be dismissed. For true sovereignty and autonomy, the SARB must be transferred to the ownership of the state.

(See full presentation)

Discussion

Co-Chairperson Maswanganyi invited members to engage with the presentation and to ask clarifying questions.

Co-Chairperson Carrim said that he knew of people in the ANC who fully supported the amendment. However, the question about whether money was available to buy back the shares, would be raised. The shareholders were in fact welcoming the attempts of the EFF to buy back the shares as it presented them with the opportunity to demand huge amounts of money, i.e. to make a killing. He asked Mr Shivambu what made the EFF so convinced that they would be able to succeed and whether they considered the legal implications of the matter.

Mr Shivambu replied that he did not know of any rational court that would grant billions in compensation to the private shareholders. If there was going to be compensation, it would be in the public interest for it to be just and equitable. The issue of shareholder compensation was being used as a scarecrow to maintain white control of the economy. He questioned the level of concentration in terms of ownership of the banks. According to him, the banks were deliberately profiling black people to charge higher interest rates.

Co-Chairperson Maswanganyi asked Adv Noluthando Mpikashe, Parliamentary Legal Advisor, to explain her involvement in the process.

Ms Mpikashe said that she assisted to draft the Bill. In terms of Parliamentary rules, a Bill presented in Parliament, must be accompanied by a report reflecting the opinion from Legal Services. She confirmed that the Bill was consistent with the legislation it intended to amend however, it raised Constitutional concerns, as it was currently presented. The Bill was accompanied by a legal opinion which was presented to Mr Malema. She proceeded by reading from paragraph 4 of the report.

Summary of the Legal Opinion

Legal Services submitted that to deprive the existing shareholders of shares in the SARB and for the state to acquire shares, constituted expropriation. In terms of Section 25 of the Constitution, expropriation was only permissible for public purposes and for the interest of the public. Expropriation was also subject to compensation for the property that was being expropriated. The principle of compensation was discussed in the Constitutional Court. Based on court findings, expropriation must be accompanied by compensation which needed to be just and equitable. Guidelines were in place for the court to decide what constituted just and equitable compensation but the guidelines were vague and made it difficult to determine what was just and equitable on a case by case basis. Section 25 required that a balance be struck between the public interest and the interest of those affected by the expropriation. If the Bill was to be passed in its current form, it would mean that the court would not have the discretion and therefore no opportunity for the position of the shareholder to be balanced against the public interest. This would infringe on the rights of the shareholders in terms of Section 25. Considering the emphasis by the court on the issue of compensation, it was unlikely that the court would find the limitation of Section 25 by the Bill, justifiable.

It was therefore the opinion of Legal Services that the Bill might not pass constitutional muster as the proposed amendment did not allow any discretion for compensation which was contrary to constitutional requirements. Legal Services was therefore unable to issue a certificate but this should not stop the Committee from proceeding with the Bill. It was recommended that the Bill be amended on instruction of the Committee to cater for expropriation by giving the court the power to make the determination on compensation. The silence in the Bill on the matter of compensation, will open it to constitutional challenges.

Co-Chairperson Maswanganyi asked the Legal Advisor to clarify the legal opinion. He wanted to know how this Bill was different from the Land Expropriation Bill, which was regarded as constitutional.

Co-Chairperson Carrim said that the policy issues needed to be addressed. If the Bill, in its current form, was unconstitutional, then the Speaker should not have referred it to the Committee. The State Lawyer should have been asked to make it constitutional. It was not the responsibility of the Committee to do so. He queried the conflicting opinions based on case laws. Responding to Mr Shivambu, he asked whether the EFF should not have ensured that they were on safe ground.

Mr Shivambu replied that this was the most un-procedural briefing that ever happened. The normal procedure was to introduce legislation and deliberate on it. The lawyer was just delivering an opinion. He suggested that Mr Carrim was putting the cart before the horse and proposed that the parliamentary process proceed. He warned the Committee to not fall into the trap of class interests and thereby preventing the undermining of their class agenda.

Adv Mpikashe replied that a Bill must be constitutional before it could be introduced to Parliament. Normally a Bill is certified before it was introduced but in this case there was a concern that the constitutionality might be challenged. The court was the final arbiter and Legal Services was just giving an opinion based on previous court judgements. It was for the Committee to decide what to do with the advice given. The constitutionality of the Bill might affect the motion of desirability. Based on the Ambrosini judgement, Parliament had the duty to process a Bill even if it was introduced by a private member.  

Co-Chairperson Carrim said that the matter was before the National Assembly and it was ultimately the decision of the Standing Committee to proceed. If it were the opinion of the Legal Advisors that the Bill could be unconstitutional then it would be inappropriate for the Committee to proceed. He proposed that the EFF slightly tweak the Bill to make it constitutional.

Mr Shivambu replied that the request from Mr Carrim would not be acceded to. The debate to amend the Bill was necessary and would not be prevented based on an opinion from the Legal Advisors.

Co-Chairperson Carrim responded that the matter could be easily resolved. If the Speaker referred the Bill, it must be considered. The office of the Speaker should be advised if the constitutionality of the Bill was in doubt. The unconstitutionality of the Bill was a matter for the EFF, the Legal Advisors and the Standing Committee to resolve. The Select Committee should not be involved.

Adv Mpikashe said that Legal Services was not the final arbiter but was only presenting a view on the matter. The Bill in its current form did not provide for fair and equitable compensation and was therefore in violation of Section 25 the Constitution. Until the Constitution was amended to allow for compensation, it was the view of the Legal Advisors that the Bill was in violation of the Constitution.

Mr Shivambu said that it had never happened before that a Bill was prevented from being presented based on an opinion from a legal advisor. He restated that the Bill would not be withdrawn. Members of the Committee who were not happy with the Bill should state their views in the Committee and in Parliament or vote against it but the Bill should not be precluded from being debated. He believed the Bill was constitutional and complied with the necessary mechanisms. Members could reject the Bill; the President could be asked not to sign the Bill or the matter could be taken to court. The opinion of the Legal Advisors had no legal standing. He accused the Legal Advisor of being part of the ‘hired staff of the ANC in Parliament’ and implied that Mr Carrim was brought in to divert attention from this Bill.  

Co-Chairperson Carrim urged Co-Chairperson Maswanganyi to exercise control over the behaviour of his member. It was not proper procedure to bring an uncertified Bill to the Committee and accused Mr Shivambu of lying.

Co-Chairperson Maswanganyi asked Mr Shivambu and Mr Carrim to focus on the process and on issues raised by the Legal Advisor.

Mr Shivambu referred members to his opening remarks in which he specifically addressed and thanked the Standing Committee for the opportunity to present the Bill. If this Joint meeting was going to interfere with the process than a Standing Committee meeting must be convened separately to take the process forward.

Co-Chairperson Maswanganyi urged Mr Shivambu to focus on the issues raised by the Legal Advisor and to move the process forward.

Mr Shivambu said that the Constitution and the rules of Parliament did not prevent a Bill from being presented. Constitutional matters would be dealt with in Parliament. He requested that a Standing Committee meeting be convened with elected members and not with appointed members such as Mr Carrim.

Co-Chairperson Maswanganyi asked Mr Shivambu to avoid focusing on personalities and to deal with the process. He asked the Legal Advisor to explain why the Bill was allowed to be referred to the Committee by the Office of the Speaker and why only at this point was the issue of constitutionality raised. He also wanted to know why the process was not stopped before being referred to the Committee. The situation was causing difficulty for the Committee and he did not want to be seen to be stifling democracy.

Adv Mpikashe replied that in terms of the rules of Parliament, members had the right to introduce a Bill. The rules also stated that a Bill presented in Parliament must be certified by the Chief Parliamentary Legal Advisor or a person designated by the Chief Legal Advisor. If it is the view of the Legal Advisor that the Bill is unconstitutional, an opinion must be issued to that effect. However, the rules did not state that Parliament must not proceed with the Bill. The member had the right to introduce the Bill but it must be accompanied by the opinion of a Legal Advisor. The court must give a ruling on the constitutionality of the Bill. The Legal Advisors only provide an opinion which the Committee might decide to agree or disagree with.

Co-Chairperson Maswanganyi asked whether the Bill went through all the processes including the Office of the Speaker and whether the Speaker was informed or consulted about the presentation of the Bill.

Adv Mpikashe confirmed that the Speaker was aware of all aspects of the Bill. As the Bill was unconstitutional, it could not be certified. The sponsor of the Bill had the responsibility to make it constitutional. It was the duty of Legal Services to guide and assist Parliament; however Parliament had the duty to process a Bill whether it was constitutional or not.

Co-Chairperson Maswanganyi said that the normal parliamentary procedures should be allowed to go ahead as he did not want the Committee to be viewed as stifling democracy. He mentioned the PMFA Amendment Bill that would also be allowed to be presented to this Committee and said that this Bill should go to the next step. All the processes should be followed including public hearings and party presentations. If there were issues, the court would bring it to the attention of the Committee as was the case with the cut-off date on the Land Claims Bill. It would be proper to allow the process to continue, for democracy to take its course and in the end, the issues of legality would sort itself out. The same process should be followed for all Bills so that it did not appear that the Committee had predetermined outcomes.

Co-Chairperson Carrim said that the decision to proceed was not a joint decision as it was a Section 75 Bill. NCOP members would participate in the process but the decision should be made by the National Assembly. Only once the NCOP Chairperson referred the Bill, would the NCOP Committee proceed. All members were bound by the same rules and he was only seeking clarity on this matter.

Mr Shivambu replied that a Section 75 Bill did not require the involvement of the NCOP. It was the duty of the Standing Committee on Finance to process the Bill. The process should not be allowed to be diverted by class and race agendas. He suggested that another meeting be scheduled without the infiltration of people, who was were part of the same group that controlled National Treasury, and who were sponsored to divert attention from the Bill. He would not concede to the demand to withdraw the Bill. Mr Carrim and his friends could go to court to challenge the Bill.

Co-Chairperson Carrim said that he was dealing with legal issues and accused Mr Shivambu of being outrageous. He was appointed just like any other member and would not interfere with the decision to proceed but would treat it like any other Bill. He urged Co-Chairperson Maswanganyi to call Mr Shivambu to order and not allow him to air his racist, anti-class and anti-Marxist nonsense.

Co-Chairperson Maswanganyi urged members to focus on the process and the legal opinion and not to attack other colleagues. He emphasised that the view of Legal Services was just an opinion and not a decision. He asked the Legal Advisor to indicate what the next step would be under normal circumstances.

Adv Mpikashe replied that the Bill needed to be advertised for public submissions.

The Chairperson said that the Bill would be treated like any other Bill and that the Committee would work with the Secretariat in this regard. The view of the Committee would be deliberated in the final phase of the process. He apologised that the debate deteriorated into clashes between members.

Mr Shivambu thanked the Chairperson for his indulgence.

The meeting was adjourned.