Second-Hand Goods Bill: public hearings

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05 March 2008
Chairperson: Ms M Sotyu (ANC)
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Meeting Summary

Various stakeholder associations made submissions on the Second Hand Goods Bill. The problem of stolen cable copper, scrap metal, motor vehicles and other second hand goods which were in circulation within the industry was highlighted as a major set back to the economy and had to be curbed. The Bill was welcomed by all the associations as a step in the right direction in controlling activities in the industry and also in regulating the activities and transactions of the various dealers. The role of the police so far was called into question and many submissions was agreed that there was need for more training both for law enforcement officers, and also for the various players within the industry themselves. The Retail Motor Industry association however asked to be excluded from the Bill. They felt that there was already enough legislation regulating the industry. There were calls to bring the Bill in line with other regulations around the industry and attempt to ensure that all were complementary. The Committee observed that in spite of the already existing regulations both within and outside the industry, it was still impossible to curb the activities of unscrupulous dealers. A number of suggestions were made in relation to proposed new wording, mainly around the definitions contained in the Bill.


Meeting report

Public Hearings on Second Hand Goods Bill
Retail Motor Industry submission

Mr Gary McCraw, Director of the Retail Motor Industry Organisation (RMI) highlighted the organisation’s comments on certain aspects of the Bill. He said the business and operational processes within the motor vehicle dealerships were highly regulated by at least ten different pieces of legislation and agreements. The RMI was concerned that the Bill would result in increased and burdensome administration and duplication of record keeping. He suggested that the Second-hand Goods Bill be applied in complementary fashion to other regulations, and not in isolation. He also suggested that a self-regulatory environment based on industry body membership with the necessary codes of conduct and governance be put in place.

In relation to Clause 3, which dealt with the obligation to register as a dealer, Mr McCraw submitted that since businesses were already liable under existing legislation, it would be unnecessary to attach liability and obligations to individuals under the Bill. Under Clause 4, he suggested that group registration rather than individual premises registration be required since some entities had multiple premises. In regard to certificates, he suggested that they be issued in the name of the main entity while a separate register must maintained internally of all premises and associated senior management. He also commented that the printing of records on a daily basis would be impractical; therefore the Bill should be re-worded in this area.

In commenting on storage of goods, Mr McCraw stated that space limitations would not allow for separate storage. Also, since the goods would need to be prepared for resale, dealers should be allowed to modify the goods, provided they did not change any fundamental identification criteria like colour, engines etc. The details should be defined and included in the regulations. He also suggested that the powers of the police be limited to the standard search and seizure processes, as set out in the existing legislation, with no additional powers, and that penalties should be reviewed based on the nature of the offences that were most likely to occur. He concluded by appealing that motor vehicle dealers be excluded from the Second hand Goods Bill as the current regulatory environment provided sufficient control already.

Rev K Meshoe (ACDP) noted that there was a lot of corruption within the second hand car industry and asked for specific suggestions on how to address the situation. He also asked how exactly was the standard search by the police as recommended by the RMI to be carried.

Ms D Kohler-Barnard (DA) noted that there were a lot of corrupt elements within the industry who needed to be regulated. The seven-day waiting period would therefore be very useful across the board to all industries concerned with the Bill.

Ms A Van Wyk (ANC) noted that self-regulation was an option that should be looked into provided it was not less than what was required by this Bill. She added that more focus should be placed on smaller dealers.

Mr M Moatshe (ANC) asked for more clarification on the issue of modification of goods.

Ms D Nhlengethwa (ANC) asked how the new Bill would duplicate administrative work,

In his response, Mr McCraw stated that dealers always conducted HDI tests on vehicles when they bought them, and that there was a consumer complaint mechanism within the industry. Furthermore, RMI was working with Business Against Crime (BAC) to clean up the industry. On modifications to the vehicles, he stated that only minor changes were necessary. On issue of police training, he said that they tried to ensure that key staff were properly trained. On the search and seizure power of the police, he stated that the intention was to ensure that there would not be duplication between the Criminal Procedure Act and the Bill. He noted again that the Act should be drafted in a way not to conflict with already existing laws and regulations.

Metal Recyclers Association (MRA) Submission
Mr Bernard Maguire, representative of Metal Recyclers Association (MRA) stated that the MRA supported the Second Hand Goods Bill. He noted that recycling contributed immensely to the downstream industry and that the MRA dealt mainly with purchased and obsolete scrap metals. The total revenue for ferrous and non-ferrous scrap metals was R10 billion. The various players in the industry were divided into the peddlers, the bucket shops, the scrap merchants, and the scrap metal recyclers, who were the largest operators in the industry. Specifically commenting on the Bill, he observed that the definition of a recycler was omitted, even though the term recycle was defined. He concluded by stating that the MRA had been in consultation with the police and BAC on the Bill, and hoped that their proposed regulations had been considered in the drafting of the Bill.

Ms Kohler-Barnard asked what was being done to address the problem of stolen copper cables bought by the industry.

Mr F Maserumule (ANC) asked for clarification on the difference between smelting and melting.

Ms F Nyanda (ANC) asked for clarification on the different types of scrap metal

Mr Moatshe asked how recycled copper would save energy, in the light of the recent power outages being experienced due to stolen copper cables.

Ms Van Wyk noted that not much focus was being placed on addressing the problem of illegal dealers within the industry. She added that there was an obligation on the Association and asked how the Association was planning to deal with this problem, considering that the new Bill would lead to an increase in activities within the industry.

In his response, Mr Maguire stated that the problem of copper cables being stolen was a massive one, with which the Association was grappling. In this regard, the MRA was involved in training of scrap metal dealers and police officers. Also, they were in consultation with the Mayor of Cape Town, and were working with Telkom in Gauteng to get intelligence on materials coming in, in order to be better able to assess which were stolen and which were not. With the new Bill, those dealers who up until now not registered would be compelled to be registered with the Association.

Mr Maguire explained the difference between smelting and melting, by saying that generally a recycler did not melt or smelt metal. They changed the form of the metal for the particular purpose for which it was needed. Industrial scrap was the type of metal collected from major industrial works, while obsolete scrap was the type whose lifespan of use for its primary purpose had come to an end - such as irreparable fridges, cars, cans and so forth. He added that legitimately bought and melted scrap did save energy when it did not have copper in it.

Second Hand Dealers and Pawn Board (SDPB) Submission
Mr Carl Preller, Vice Chairman, Second-Hand Dealers and Pawn Board commended the authors of the Second Hand Goods Bill, stating that it would contribute to a more regulated second hand business and pawn broking industry in South Africa. He went on to suggest certain amendments that should be made to particular clauses of the Bill. On the definition of “Dealer” he suggested that it should include panel beaters and vehicle body repair shops as well as engine re-builders. This was because many stolen and hijacked vehicle and body parts were channelled through these industries. He also suggested that the definition of “Pawnbroker” should include a transaction where goods were sold by a person, and the dealer would contractually binds himself to sell the goods back to the same person at a higher price. The definition of “Registers” should include any other document required by any other legislation or regulatory body that contained the same information as required by the Second Hand Goods Bill.

In relation to Clause 22, which dealt with records kept by dealers, he noted that it would be too cumbersome for dealers to comply with the sections, no matter how sophisticated their skills and technology. This was because of the magnitude of the volume of paper trails for storage. In relation to clause 25, dealing with motor vehicle records, it was suggested that “Motor Vehicles” should include all vehicles such as caravans, trailers, tractors, earth moving equipment, farm implements and all vehicles that ran on wheels. This was because all these categories were acquired and sold or pledged at dealers and pawnbrokers.

In relation to Clause 26, which dealt with controlled metals, Mr Preller suggested that the wording should be changed to be more specific without defeating the ends of the Bill. He also suggested that the Bill should dictate that police officials who inspected and dealt with dealers must be designated and trained, and that a clear distinction should be drawn between a police official and a designated police official. He recommended that the term “Reasonable grounds” also be more specifically defined.

In conclusion, Mr Preller stated that the SDPB was committed to assisting the police in regulating and promoting ethical standards within all second hand industries. He suggested that the police be instructed by legislation to prosecute unregistered and non-compliant dealers. He was also concerned that the Bill made no provision for previously disadvantaged, emerging entrepreneurs to participate in an emerging economy.

The Chairperson noted that the submission seemed to put a lot of blame on the police. She agreed that the police were a major part of the problem and there was need to consult more and focus on how to deal with the role of the police within the industry.

Ms Van Wyk asked if the SDPB had an alternative to the problem of unscrupulous dealers cloning registration certificates after their registration had expired. She wondered why the industry was worried about the search and seizure obligation on the police, since warrants would have to be issued by magistrates before such searches could be conducted. She added that there was the need to clearly know what the powers and obligations of the police were with regard to unregistered dealers.

Mr Meshoe said he had observed that a majority of the dealers were unregistered. He asked if informal dealers were registered or unregistered.

Mr Moatshe asked for clarification on how the Bill could make provision for previously disadvantaged and emerging entrepreneurs to participate in the economy.

In his response, Mr Preller stated that there were no specific statistics of the number of dealers. He added that there were informal pawn-brokers everywhere but with proper and adequate training, these pawn brokers could be introduced into the formal regulatory setting. These informal dealers should be assisted, and not criminalized, by the Bill.

The Chairperson thanked all the presenters and promised that their submissions would be considered by the Committee during deliberations on the Bill.

The meeting was adjourned.



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