Security Industry Regulation Bill: hearings

Meeting report

SAFETY AND SECURITY PORTFOLIO COMMITTEE
9 May 2001
SECURITY INDUSTRY REGULATION BILL: HEARINGS

Chairperson: Mr M George

Documents handed out:
-Security Officers Interim Board: Executive Summary of Submission
(Full submission and other documents of interest: e-mail www.sira-sa.co.za)
Security Officers Interim Board presentation document (See Website)
Security Officers Interim Board policy paper of 31May 2000 (See Website)
Report to the Minister of Safety and Security on the regulation of the private security industry
Report on the foreign contact and comparative research initiative of the Security Officer's Interim Board (Australia, New Zealand and Malaysia)

SUMMARY
The Security Officers Interim Board presented a brief overview of the industry to the committee. The committee was however more interested in the board itself and the problems they were experiencing in regulating the industry. The ability of the board to fulfill their mandate, especially as it relates to the board advising the Minister was discussed at length.

The issue of the Bill itself did not receive as much attention as the above mentioned issues. The committee merely inquired about the board's views on some of the issues that were raised in previous hearings. It was interesting to note that members of the board had divergent views on whether foreign investors should be allowed to own security companies in South Africa.

MINUTES
Security Officer's Interim Board (SOIB)
Mr Patrick Ronin (CEO and Registrar) and Mr Hans Visser (Vice-Chairperson and Chief Legal Adviser) presented the committee with a brief overview of its activities and a statistical analysis of the industry.

The key task of the board is to regulate the industry and to advise the Minister of Safety and Security. The present board is a transitional body and has therefore shaped their functions accordingly.

Mr Visser stated that the board is totally committed to the proper regulation of the industry but in reality it easier said than done. The board supports every provision of the Bill as far as it reaches proper regulation. Mr Visser stated that their successor must be willing to face many challenges, as effective and proper regulation is not popular in the industry.

Mr Patrick Ronin continued with a statistical overview of the industry. The actual cost of regulating the industry is R30m per annum. The value of the turnover in the industry has increased considerably in the last decade. In 1990 turnover was at R 1.2 bn whereas in the year 2000 it has escalated to R13bn. Of the larger private security companies only eighteen have more than 1000 employees. Fifty-six of them have between 500 and 1000 employees. It is thus evident that the industry largely comprises of smaller companies.

Mr Ronin explained that in keeping with the aim of transformation in the industry, 60% is
active registered security businesses and the remaining 40% is made up of Previously Disadvantaged Industries (PDI) businesses. The difficulty of regulating the industry is understood when one realises that there are more active security officers in SA than there is members of the SAPS. The figures are 190 000 and 124 000 respectively.

Mr Len Rasegatla, head of the Safety and Security Secretariate and his assistant, Mr Soloman Maila was also present at the meeting.

Discussion
The Chairperson stated that there were many issues that must be clarified by the SOIB. Mr M George stated that the discussion would have two parts to it. The first is to deal with the board itself and the second, to deal with the Bill before them.

Besides Mr Ronin and Mr Visser, Mr Obi Mabena and Mr Dawood Alexander also made inputs.

The Chair asked to be briefed about the internal problems experienced by the SOIB.

Mr Visser stated that a great deal of trouble started when a prominent member of the board, Mr Baartman resigned. Mr Baartman apparently resigned because he was unhappy with the manner in which disciplinary proceedings against a fellow board member, Mr Cedric de la Harpe was handled. Mr Visser explained that disciplinary action was instituted against Mr de la Harpe when evidence came to the fore that he was trying to derail the regulation process of the SOIB. He however pointed out that these problems have been addressed and that the SOIB is well on track.

Mr M Booi (ANC) stated that to his understanding Mr Baartman was a very influential person of the board. Mr Booi believed Mr Baartman still to be involved in the industry. Is there truth to this?
He was also concerned that Mr Patrick Ronin was holding both the posts of Registrar and CEO. Mr Booi felt that too much power was concentrated in one individual.

Mr Visser stated that according to his knowledge Mr Baartman was no longer involved in the industry. He felt that Mr Baartman had manipulated his appointment to the board so as to derail regulation from within. Mr Visser stated that both Mr Baartman and Mr de la Harpe had the common aim of derailing the board's attempts to regulate the industry.

Adv P Swart (DP) stated that the board had submitted a report to the Minister in May 2000. He asked why the report was submitted to the Minister

Mr Visser stated that their legal team setting out the allegations and evidence that they have against Mr de la Harpe had drafted the report. One of the allegations against Mr de la Harpe is that he had the home phone of Mr Patrick Ronin, the Registrar tapped. Mr Visser stated that Mr de la Harpe is to appear in criminal court on the 29 July 2001 to face the charges against him. Of concern to the board is that they have not as yet received a response from the Minister.

Mr Booi asked what are the problems that Mr Baartman had with the board. Was it personal problems?

Mr Ronin stated that Mr Baartman was primarily dissatisfied with the manner in which disciplinary action had been taken against Mr Cedric de la Harpe.

The Chair asked on whose advice were Mr Baartman and Mr de la Harpe appointed. He added that if Mr Baartman had no other conflict with the board how did the board draw the conclusion that he was against regulation. The Chair felt it strange that an individual would take up the position in a regulating body when in principle he is totally against regulation.

Mr Visser stated that the appointment of Mr de la Harpe was on the advice of Mr Azhar Cachalia the then head of the Safety and Security Secretariat. He personally felt that Mr de la Harpe's appointment on the board was inappropriate as prior to his appointment, Mr de la Harpe was engaged in court battles with the board.

Mr Visser explained that they have evidence to prove that Mr de la Harpe had leaked information to Fidelity Guards relating to a court case that they were engaging in with the board. In terms of the legislation governing the board, the conduct by de la Harpe is illegal. They also have all the documentation of the cases that Mr de la Harpe had brought against the board prior to his appointment.

Mr de la Harpe had also engaged in a media campaign on scandals and problems of the board. As far as the direct operations of the board is concerned, when matters against security companies that have been found guilty in hearings are referred to the board for confirmation, Mr de la Harpe would always delay matters by insisting on seeing the original transcripts of the hearings. His bias in favour of the security companies was blatant.

Mr Visser referred to a statement made by Mr Randal Howard (SATAWU) that the board was formed for failure. The point he made was that persons who were appointed were going to create problems for the board. The Minister of Safety and Security is bestowed with the power to make the appointments to the board. Mr Visser stated that the Registrar and CEO is not a member of the board and is not appointed by the Minister. Members of the board themselves appointed him.

The board had hoped to meet with the Minister on a regular basis but as yet it has not materialised. As yet they have only met once with the Minister.

The Chair stated that if the board had only met with the Minister on one occasion, how did they communicate with the Minister.

Mr Visser stated that they had in the past communicated with him through the Safety and Security Secretariat. The board agreed with the Secretariat that they should work together so as to have a concerted effort of advising the Minister. A joint policy team consisting of both members of the board and the Secretariat met a few times to co-ordinate the advising. However, this arrangement ceased in December 1999 when the Secretariat and the board met for the last time. The apparent reason was that the Secretariat was going through restructuring. Mr Visser stated that the board received information from the Minister and the Cabinet that the joint advising by the Secretariat and the board is to cease. Since then the two bodies have gone their separate ways as far as advising the Minister is concerned.

The Chair felt that the board's function is to advise the Minister and that from what he has heard it seems that it has not been done. He stated that his question remains unanswered. The Chair asked from the time that the two organisations went their separate ways, how did the board regularly advise the Minister.

Mr Mabena stated that the board had a dual mandate. The first is to regulate the industry and the second, to run the board. He felt that both mandates had been discharged. Mr Mabena stated that the mandate to the Minister is to advise him on how to better regulate the industry. He pointed out that the issue was not to have regular meetings with the Minister.

The Chair stated that the committee was under the impression that the board had to regularly advise the Minister on regulating the industry. He felt that the committee was not getting the answers that they are looking for and that the board is contradicting itself.
Mr George stated that the Minister should be advised regularly but that the committee would make their own judgements on the issue.

Mr Booi stated that if the board is unable to fulfill their mandate of advising the Minister then Parliament should perhaps change the board's mandate.

Ms A van Wyk (UDM) asked what is the current relationship with the Secretariat? She stated that the board should have brought it to the attention of the committee that they were no longer able to advise the Minister on the industry.

Mr Visser conceded that it is still the board's mandate to advise the Minister. He stated that he welcomes co-operation from the Secretariat and hoped to have closer working relations with them in the future. Mr Dawood Alexander stated that the board was not aware that they could make presentations to the committee on the issue.

Rev Meshoe (ACDP) asked if the board could justify their existence if they are not fulfilling their primary function of advising the Minister.

Mr Visser reacted that they do not have to justify their existence as the Minister appointed them. Mr Alexander added that the issue is not about the existence of the board but rather about justifying the existence of a regulating authority.

Mr Swart asked if the agreement between the board and the Secretariat to advise the Minister jointly, was taken to prevent conflicting advice being given to the Minister by the separate bodies.

Mr Visser stated that it was never the case. The idea of working together was taken on the basis of mutual co-operation. When an inter-departmental committee was formed to facilitate co-operation between departments, the board had been excluded and thus ended the co-operation with the Secretariat.

Ms van Wyk asked what the board's current relationship with the Secretariat is like. Do you feel that you are able to perform your mandate adequately, if not what is the committee able to do to assist the board?

Mr Mabena stated that their relationship with the Secretariate had at times been better. He added that they are trying to develop a framework to better regulate the industry, so in essence they are trying to improve their mandate. Mr Visser invited the committee to visit their head office to see how they operate. He stressed that their efforts in trying to communicate what they are doing had not been that successful. There is therefore room for improvement as far as communication is concerned. Mr Visser pointed out that the last official meeting that they had with the Secretariat was in August 2000. However, he had been the only board member in contact with them since then due to the work being done on the Bill.

Adv Gaum (DP) referred to Mr Visser's statement that the relationship between the board and the Secretariate could be better. He therefore asked what are the major problems that exist between the Secretariate and the board.

Mr Visser stated that they had a problem with a report that the Secretariate had issued at the beginning of the year 2000. The report basically trashed the efforts of the board.
Mr Visser however pointed out that this was before Mr Rasegatla was appointed to the Secretariate. The board is still awaiting the efforts of Mr Rasegatla to trace who in the Secretariate had written the report.

Mr Rasegatla (Secretariate) stated that there was a relationship between the Secretariate and the board whilst Mr Azhar Cachalia was serving in the Secretariate.
He stated that he was not aware of many of the things that the board had mentioned. Mr Rasegatla stated that the report being referred to was written by a person who had been contracted to carry out a survey. The content of the report is the opinion of the person writing it and it is not the view of the Secretariate. He believed that at present the board should report directly to the Minister and not to the Secretariate but he did however remark that he was in favour of improving relations between the board and the Secretariate. Mr Rasegatla felt that it was a good start to have worked with Mr Visser in the drafting of the Bill.

Adv Swart asked whether the board felt that Mr de la Harpe had influenced the way in which the Secretariate felt about the board.

Mr Visser referred to a meeting that was convened by Mr de la Harpe in last year at which both the Secretariate and the Security Industry Association of SA (SIASA) were present. The board was however not invited.

Mr Rasegatla explained that Mr de la Harpe and SIASA called the meeting as preparation for their submissions to Parliament. The Secretariate and Adv Kok (Chief legal adviser to the Department) were invited to the meeting to clarify matters in the Bill to them.

The Chair stated that it is clear that the matter would not be easily resolved. The relationship between the board and the Secretariate must be improved. He added that it was a pity that the board did not know that they could come to the committee for assistance. If the committee had met them, some of their problems could have been prevented.

The Chair proceeded to deal with discussions relating to the Bill.

Adv Kok asked if he could be permitted to address the committee.
He wished to inform the committee that Mr Visser was one of the most valuable members of the team that drafted the Bill. Adv Kok stated that Mr Rasegatla had also made invaluable contributions during the drafting process.

Adv Swart asked the following questions:
(i) Should in-house security be covered by the Bill and to what extent?
(ii) How does the board feel about the possibility that there would be a duplication of functions? Is it preferred that the board should perform these functions.
(iii) What is the board's feelings on the use of tribunals in view of the fact that our courts' heavy loads.

(i) Mr Visser stated that regulation in terms of the Bill is limited to persons performing security services. As far as in-house security is concerned, the control of the companies should not be looked at but the control of the in-house security is something to consider.
(ii) Mr Visser stated the duplication of functions have already been anticipated by the board. As far as the issue of labour is concerned, no conflict exists with the department of Labour. The board and the Department have concurrent jurisdiction on matters of labour. The approaches on imposing sanctions on guilt parties are different. The board imposes fines whereas the Department uses compliance and labour courts. The board's choice of imposing fines is as a matter of practicality.
(iii) Mr Ronin stated that the board would welcome the use of tribunals to act as a deterrent to unregistered operators committing transgressions.

Adv Gaum asked the following questions:
(i) How does the board feel about the inclusion of house sitters and car watchers in the Bill?
(ii) What are the board's views on the inclusion of locksmiths and polygraphists in the Bill?
(iii) Is it true that the board is of the view that looking after the interest of the public is the duty of the SAPS and not the board? Is it also true that the board feels that if they have look after the interest of the public if the security industry poses a threat to the country, then the board should receive funding from the state?
(iv) In the Bill no mention is made to training of security officers or the training and qualifications of board members. What suggestions do the board have in this regard?

(i) Mr Visser stated that board strongly feels that the rights of car watchers should be protected. For too long have employers taken advantage of them.
The house sitters being referred to is not the private individual doing you a favour house-sitting your property. It refers to persons hired by banks to look after and protect houses that they have repossessed. They have adequate protection under the Bill.
(ii) Mr Alexander stated the work locksmiths do is similar to that of alarm installers. He added that the board felt that individuals who have the ability to open locked doors should be registered. This does not require the person who merely cuts keys to be registered.
Mr Visser stated that the board does not oppose a separate Bill for locksmiths. As long as it leads to the same outcome which is the protection of the public. He added that the board is not 100% sure whether the Bill should cover polygraphists. Mr Visser conceded that they have done extensive research on the subject but have for now included them in the Bill. Polygraphists however feel that they should be regulated by the health industry.
(iii) Mr Visser stated that the board felt that state security should not be the emphasis of the function of the regulating authority.
(iv) Mr Visser stated that he is fully supportive of board members being trained to allow them to better regulate the industry. Familiarity with the industry does help to help to understand the problems.

Mr Zondo asked how the board felt about being audited by the Auditor-General.

Mr Ronin stated that at present they are being audited by KPMG. He personally welcomed being audited by the Auditor-General as this might improve the board's chances of getting state funding.

Mr Booi stated that South Africans were concerned that a great deal of foreigners are being employed in the industry. He asked what is being done about it.

Mr Ronin stated that Section 12 of the current Act governs the appointment of security officers. The requirement has never been that a security officer had to be a SA citizen. Operational requirements however do require that you should not have been found guilty of an offence. Foreigners therefore have to submit a clearance certificate from the police services in their country in order to qualify for the job. This requirement has reduced the influx of foreigners into the industry.

The Chair stated that from the board's presentation it was shown that 60% of the industry is owned by whites and 40% by smaller businesses. Of interest to the Chair was that of the R13 bn industry R 11bn is owned by whites and only the remaining R2 bn of it is owned by small businesses. The Chair asked for an explanation on this divergence.

Mr Ronin provided the committee with updated figures, being 58% white owned and 42% owned by small businesses. He explained that the R 2 bn and R 11 bn figures had been obtained by using the number of security officers employed by the businesses in their calculations. The PDI made up 19% of the total number of security officers employed and the white owned businesses made up 79% of the total.
± 19% x R 13 bn = R 2 bn
± 79% x R 13 bn = R 11 bn
Mr Ronin explained that of the 40% small companies, many are owned by the bigger white companies and are used as fronts in order to obtain tenders.

The Chair asked the following additional questions:
(i) What is the reason for the increase in the registration fees and how do they affect the PDI's?
(ii) Does the board feel that persons having no knowledge about the industry are unable to regulate it?
(iii) In foreign countries, the security industry is complementary to the police. How does the board feel about the industry being complementary or alternate to the SAPS?
(iv) Is the revenue from registration fees taxable?

(i) Mr Ronin stated that in the period 1996-1997, 92% of the funding of the board was obtained from employee security officers. This was so because the employer businesses were required to pay the same registration fee of R7 as employees. In order to correct this inequality the registration fees for employer businesses were increased to a once off payment of R2600 and an annual fee of R200. Mr Mabena stated that the increase could not possibly be intended to prevent smaller black businesses from entering the industry.
(ii) Mr Visser stated that there is no doubt that such individuals could make a contribution. The board however feels that there should be some individuals on the board who have knowledge of the industry. There could be a combination of persons from within and from outside of the industry.
(iii) Mr Visser stated that the board does not have a philosophy on the issue. He personally felt that the security industry should be complimentary to the SAPS. Internationally there are diverse views on the issue.
(iv) Mr Visser stated that revenue from applications for registration is not taxed but that revenue from renewals of registration is taxed.

Ms Van Wyk was concerned about the light penalties that were imposed on companies. She stated that the Bill does not address the issue of administrative penalties. Ms Van Wyk asked how giving of penalties are enforced.

Mr Visser agreed that the penalties are too low. They are totally unrealistic. He felt that penalties for breaches should be specifically set out in the Bill. Administrative penalties should also be set out in the Bill.
Mr Ronin stated that in the year 2000, the board was able to collect 58% of the penalties that were imposed. The trend is that when businesses are fined, they declare bankruptcy and the owners of these businesses simply open up new businesses. Mr Ronin felt that provision should be made in the Bill for owners to be personally liable for breaches.
When companies go insolvent, employees also lose out on their wages.

Rev Meshoe stated that there is a view that non-South Africans should not be allowed to own security companies. Others say that foreign ownership should be allowed as it stimulates investment. What is the board's view?

Mr Visser stated that a balance needs to be found regarding the nature and extent of foreigners in the industry. He felt it wrong to make a general rule to exclude foreigners totally.
Mr Puller on the other hand personally felt that foreign ownership should not be allowed.

The Chair agreed that the issue of foreign ownership is complex. Members of the board themselves are in disagreement over it. Mr George felt that foreigners could be allowed to be shareholders but at management level SA should be appointed.

The Chair stated that there were many issues still to be discussed with the board but due to time constraints they are unable to deal with them. He stated that the board would have to meet with the committee again to deal with the outstanding issues.

The committee commenced dealing with Mr Gaum's request in the meeting of Friday 6 May 2001 to invite the Commissioner of the SAPS to address the committee on the issue of his involvement in the investigation of the plot against the President. Mr Gaum had made the request based on an allegation in the Mail and Guardian that the Commissioner is personally involved in the investigation.

The NP, DP and the UDM were in favour of asking the Commissioner to address the committee. The ANC and the IFP felt it frivolous to call the Commissioner to address the committee based on allegations in the media.

The Chair finally stated that it seems that the majority of the committee is in agreement that the Commissioner should not be asked to address the committee. Ms Van Wyk (UDM) and Mr Gaum (NP) wanted it to be placed on record that they were not in agreement.

The meeting was adjourned.