Interception & Monitoring Bill: Hearing

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Justice and Correctional Services

27 August 2001
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Meeting report

JUSTICE AND CONSTITUTIONAL AFFAIRS PORTFOLIO COMMITTEE

JUSTICE AND CONSTITUTIONAL AFFAIRS PORTFOLIO COMMITTEE
28 August 2001
INTERCEPTION AND MONITORING BILL: HEARINGS

Relevant documents:
Interception and Monitoring Bill [B41 –2001]
Office for the Control of Interception and Monitoring of Communications submission
MTN submission
Vodacom submission

Chairperson: Adv J de Lange

SUMMARY
The morning session was closed to the public when technical details regarding interception and monitoring were discussed.

In the afternoon session, the Office for the Control of Interception and Monitoring of Communications made a submission to the Committee on technical aspects of the Bill. Service providers, MTN and Vodacom, aired their grievances over the provisions of the Bill that directly affect them. At issue was the introduction of a system to monitor prepaid cellular calls with the aim of drastically reducing cellphone related crimes. Much discussion ensued over who should bear the cost of setting up and running the system. There was no dispute that the cost implications would be enormous. MTN and Vodacom felt that law enforcement was government’s responsibility and that there was no obligation in their licensing agreements for them to comply with setting up such a system as required by the Bill.

MINUTES
Office for the Control of Interception and Monitoring of Communications
Judge B Gordon, head of the Office for the Control of Interception and Monitoring of Communications explained that the Office was responsible for considering applications by law enforcement agencies for the bugging of persons, premises and phones for the purposes of intercepting and monitoring communications.

Clause 1: Definitions
The Judge was fully supportive of the definition of "judge" as in the Bill. He explained the reasoning for changing the definition of "judge" from that of the 1992 Act where the judge heading the Office could either be a sitting judge ie actively on the bench or alternatively a retired judge. The Bill limits the requirement of the position to that of a judge that has been discharged from service or to one that is retired. The change is to prevent possible conflict of interests between matters that a judge is actively presiding on and matters relating to applications for bugging. As an aside, he noted that in the USA applications for warrants permitting bugging are brought before actively sitting federal judges.

The Judge was concerned about the definition of "serious offence" in the Bill. He stated that it is critical for him to know the offence that must exist before he is able to even consider applications made by investigating authorities (South African Police Service, the National Intelligence Agency, the Defence Intelligence, the Secret Service and the Special Investigating Unit. The original proviso in the Act that it must be an offence as in Schedule 1 of the Criminal Procedure Act of 1977 provided that the offence:
(i) was committed over a lengthy period of time
(ii) was committed on an organised basis
(iii) was committed on a regular basis
(iv) may cause harm to the economy or the national interests of the Republic
is totally unreasonable. He stated that requirements (i), (ii) and (iii) are not necessary. The requirement that the offence is set out in Schedule 1 of the CPA together with requirement (iv) is sufficient. He thus proposed requirements (i), (ii) and (iii) be deleted from the Bill.

Clause 2: Interception and monitoring
Clause 2(2)(a) makes provision for the monitoring of a conversation if you are a party to it or if you consented to it. Judge Gordon supported the provision but cautioned that it could mean more than simply being one of the parties to the conversation. He asked for provision to be that if a person is monitoring his conversation with another person for the purposes of extorting or committing a crime against another person, it should not be allowed. Reference was made to USA case law in support of his argument.

The Chairperson asked what for the Judge’s opinion of Clause 2(3). The clause makes provision for a person who is party to a conversation in the course of carrying on business to monitor such conversation in the interests of his business. Would the clause provide protection to private investigators?

Judge Gordon fully supported the provision. He did point out that investigators would only be able to rely on the clause if the investigation they were conducting was in the interests of the business.

Clause 4: Issue of direction
Clause 4(2) provides for the judge to grant an application if he is "satisfied" that a serious offence has been committed or that the security of the Republic is threatened. He fully supports the substitution of "satisfied" for "convinced" as previously used in the Act. The explanation was that to be "convinced" implies proof beyond reasonable doubt, which would make an application unnecessary.

Clause 6: Assistance at execution of direction by service providers, Clause 7: Prohibition on certain telecommunication services and Clause 8: Central monitoring services
Judge Gordon had major concerns about the responsibilities, duties and financial obligations of service providers. He was aware that discussions were ongoing on these issues and therefore chose not to make any comment. The Judge did express reservations as to whether a Department of State, as a negotiating party, could legally unilaterally determine the costs to be borne by the other party, that is, the service provider. (See submission for detail.)

The Chair was keen to hear the Judge’s views on Clause 9 as he had concerns about its constitutionality. An invasion of privacy with a court order is in no way less damning than an invasion of privacy without one. The Judge stated that he would give his comment at a later time.

MTN
Mr J Sellschop stated that MTN is committed to fighting crime in South Africa but it must also be borne in mind that it has obligations to its customers as well. A brief presentation was given dealing with the following three issues:

Right to privacy
MTN had concerns that there would be frivolous invasions of privacy on their customers. Past experience had shown that corruption and abuses of power by law enforcement agencies were rife. Orders detailing requests for information were often manipulated and MTN felt its concerns were valid as it would open itself to liability suits in cases where a client’s privacy had been invaded.

Financial burden
Mr Sellschop stated that the financial burden on MTN would be enormous in setting up the infrastructure for interception and monitoring of cellphone calls. Estimates by MTN are between R50 – R70 million which does not include costs for upgrades and maintenance. MTN believes that it is unfair of government to expect it to shoulder such costs, as it was not part of its original licencing agreement. As part of its licencing obligations, MTN annually pays 5% (R222 million) of its net operating income to the fiscus. This amount should suffice as far as its civic duty to combat crime is concerned. An unprecedented expenditure of ± 50million would have to be absorbed by the MTN customer and this in itself would be unfair. MTN consequently recommends that government absorb the cost from the 5% of its net operating income payable to the fiscus over a period of 3-5 years. Mr Sellschop concluded that MTN is a telecommunications service provider and not a law enforcement agency. The responsibility for law enforcement should lie with government.

Practicability
Mr Sellschop emphasised that MTN is a consumer-based business. Given the unique nature of South Africa’s socio-economic structure, it would be a monumental task to implement the infrastructure as is envisaged by the legislation. It would also be practically impossible to attach an identity to every cellphone user. One is unable to make comparisons with countries such as Germany and France that have successfully implemented technologies for cellphone monitoring and interception. In these countries all prepaid cellullar users have user identities attached to them whereas in South Africa there are currently ± 5million prepaid users who do not have identities attached to them. The distribution outlets in South Africa are too informal (street vendors, spaza shops etc) and consequently do not allow for identities to be attached to buyers of cellphones and cellphone related products. The cost of regulating the prepaid market must be justified by the information that would be needed from it. (See submission for detailed comments on the Bill.)

Discussion
Ms F Chohan-Kota (ANC) asked:
(i) How often do networks upgrade hardware and software and how would this be impacted by the envisaged monitoring system.
(ii) Has MTN ever considered tagging a limit to the amounts of credit that one is able to store on a prepaid account? She stated that someone with credit in excess of R5000 could definitely be construed as a person involved in questionable activities.

Mr Sellschop responded:
(i) The cost of upgrading hardware and software depends on the spread of the technology.
(ii) It is difficult to limit credit especially if prepaid vouchers have been purchased at vending machines. Persons involved in crime are, in most cases, using stolen phones and attempts are being made to limit their use.

Mr L Landers (ANC) noted that all he was hearing was that the monitoring system could not be implemented. It is however clear that cellphone crime is emanating from the prepaid services. He asked what alternatives MTN is suggesting to address the problem. He also asked how the implementation costs were borne in countries such as Britain, New Zealand and the USA. Was it sponsored by service providers or by government?

Mr Sellschop replied that in the USA, the government funded the interceptability of the networks.

The Chair seemed sceptical and asked if it was as simple as that. He felt that the legal grounds for the responsibility should obviously lie with the service provider.

Mr Sellschop reacted that if the obligation had been part of its original licensing agreement, MTN would have made provision for the expense and the system would be implemented. Australia, France and Germany are examples of countries where the obligation had been included in service provider licensing agreements.

The Chair asked if there are any countries in which it was imposed post-licensing agreements. He personally only knew of the Netherlands. Adv de Lange commented that apparently some service providers in those countries that have implemented the system post licensing agreements have unfortunately collapsed.

Mr Sellschop remarked that this is exactly what MTN is trying to prevent.

The Chair insisted on knowing international examples of where the responsibility of implementing the system lies with the service providers.

Mr Sellschop was unaware of any examples.

The Chair asked if it was correct that MTN’s view is that South Africa should not implement the monitoring system due to the high cost and difficulty of its implementation. Should South Africa not follow international practice? Must it be forever locked in within its South African context? Why would it not be possible to require a person produces his identity document when buying a cellphone or recharge voucher? This system seems to work equally well for pensioners collecting their pensions. Adv de Lange emphasised that the monitoring system would be a step in the right direction in providing a paper trail for law enforcement to follow in their investigations.

Mr Sellschop reiterated his statement about the high cost and practicality of implementing the system. He pointed out that the system would eventually break down, as the paper trail would eventually come to an end.

The Chair was adamant that the legal obligation in implementing the system lies with service providers. It would not make sense to pass the legislation without the requirement that service providers should assist in the tapping of cellphones for law enforcement purposes. Practically speaking, the rest of the Act would not work. The Chair understood the argument about the difficulties of putting the system in place but he nevertheless felt it to be a necessity.

Mr Landers asked whether the prepaid cellphone system was perpetuating crime in South Africa.

Mr Sellschop replied that it is people who commit crimes and not cellphones. It is the same prepaid system that had made communicating more accessible and affordable to the majority of South Africans.

The Chair stated that government would not be breaching a legal obligation if an additional obligation were imposed on service providers to implement a monitoring system. The original legislation covering service providers makes allowances for additional obligations to be imposed on service providers.

Mr Sellschop noted the point.

Mr G Magwanishe (ANC) asked why is cost such a major issue given the good that the system would eventually do. He asked for some figures regarding MTN profits and expenditure. The Chair agreed and asked for an explanation of how MTN arrived at the R50-70 million implementation cost. He also asked if MTN sponsors any good causes.

Mr Sellschop replied that it would be inappropriate for him to disclose MTN’s profit and expenditure figures given the presence of their competitor, Vodacom in the meeting. He would make it available to the committee at a later time. MTN had received quotes from its technical department on implementation costs. Mr Sellschop agreed to the Chair’s subsequent request for the actual quotes to be forwarded to the committee for perusal. It further came to light that MTN had spent R106 million on South African cricket over the last six years.

The Chair asked how does MTN differentiate between spending on sport and spending on crime prevention in South Africa.

Mr Sellschop replied that R20million had been donated to combat crime, specifically to homicide divisions. MTN had also fitted 100 police vehicles with car phones and supplied police officers with cellphones. He stated that in the end law enforcement ultimately lies with the state and the cost of monitoring cellphones should thus be borne by it. MTN would in any other way try to assist law enforcement where possible.

The Chair remained unconvinced. He pointed out that if cost was such a major factor then why would MTN have been willing to implement the monitoring system if it had been provided for in its licencing agreement.

Mr Sellschop replied that implementing it now would place too great a financial burden on their consumers. If it had been part of its licensing agreement, provision could have been made to budget for it via proper financial planning.

Adv Masutha was disappointed that a compromise could not be reached. He asked if MTN would not be willing to contribute even a percentage of the cost towards the implementation of the system.

Mr Sellschop replied that negotiations have only begun, there is still a long way to go. He stated that at this stage anything is possible.

Vodacom
Mr T Beale said that Vodacom is generally supportive of the objects of the Bill as it provides a means for judicial oversight. However Mr Beale was quick to point out that despite its genuine support for the legislation, it must be borne in mind that the interests of Vodacom’s customers come first. Vodacom has to balance the interests of its customers and shareholders against its support for government’s attempts to eradicate crime.

Mr Beale explained that however easy it may seem to establish a database of customer identification information, it is quite another task putting it into practice. Customers are generally sensitive about their privacy and optional directory listings offered by Vodacom have very rarely been used. Vodacom has no objection to the requirement that contract subscribers furnish their identity documentation when subscribing to contracts. However they do share the sentiments of MTN that it is far too costly and impractical to have this as a requirement for prepaid users given the informal manner in which the product is distributed to consumers.

Vodacom also feels that the responsibility of providing the infrastructure and implementation of the monitoring system is the responsibility of the state as it was not one of its obligations in its original licensing agreement. Mr Beale stated that the provisions in the licensing agreements should be respected and that government should not impose unfair and unreasonable obligations on the service providers. Vodacom’s objective is to provide an affordable service to its customers and does not lie in law enforcement. It will however assist in any reasonable way to combat crime in South Africa. [See submission for detailed comments on the Bill.]

Discussion
The Committee did not engage at length in discussion with Vodacom as most of the issues had already been exhaustively discussed with MTN.

Ms Chohan-Khota asked how often are upgrades on hardware and software done. She also asked what Vodacom’s estimates were for the cost of implementing the monitoring system.

Mr Beale stated that upgrades are normally done once a year and it takes six months
to complete. Vodacom’s estimate for the implementation of the system is ± R160million.

The Chair stated that if government were to pay for the system, the ordinary taxpayer would bear the cost. Would it not be fairer to pass the cost on to the cellphone user? He also asked if Vodacom subscribes to the notion that the prepaid system should stay as it is and that requiring prepaid users to furnish identification at each purchase, is impractical.

Mr Beale replied that no matter which way one looks at the situation, the cellphone user would in any event be contributing to the payment of the system. Cellphone users currently make contributions to the fiscus via levies that are charged to service providers by government.
Vodacom shared the same view as MTN on the issue. The cost implications make it impractical.

The Chair reiterated his earlier point that the Act becomes meaningless without the possibility of tracking cellphone users, especially prepaid users. He pointed out that he does see the reasoning of the service providers from a business point of view.

Mr Beale stated that law enforcement should provide figures on the numbers of crimes that are perpetrated with prepaid cellular services in order to justify the investment in the tracking system.

The Chair stuck to his guns that the cost of the set up and implementation of the tracking system should be borne by the service providers.

The Chair in conclusion asked what the duration of the cellphone licences was. Mr Beale replied that it was fifteen years.

The meeting was adjourned.


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