AfriForum warns: "State will be able to expropriate any company at less than market value and transfer it to black empowerment groups"

AfriForum has warned that the current wording of the proposed Expropriation Bill [B 16 - 2008] will enable the State to expropriate any company and to transfer it to black empowerment groups at an expropriation amount determined by the State at substantially less than market value, without the owners of the expropriated company having the right to contest the amount in the courts.  AfriForum bases this warning on the wording of Article 4(1) of the Expropriation Bill which determines that if a legal person were to satisfy the Minister that it requires property in "the public interest" and that an agreement could not be reached with the owners of the property, the Minister will have the right to expropriate such a property on behalf of the legal person.  According to the Bill's definition of a legal person, it includes non-profit organisations, but does not exclude other companies.  According to AfriForum, black empowerment may in terms of the Bill be regarded as a part of public interest.

According to Kallie Kriel, CEO of AfriForum, the Bill's stipulation that the State will have the right to expropriate any property in the interest of other institutions, and then at a lesser amount than market value, will deter local as well as foreign investors.  "Why will someone invest in property - whether movable or immovable, if the person knows that the State has the right to expropriate such property at any time at a lesser amount, determined in an one-sided manner?," Kriel asked.

Kriel underlined that the Bill undermines the stipulations of the South African Constitution regarding, amongst others, property rights.  He emphasised that AfriForum would definitely take legal steps to have the Bill declared unconstitutional, if it were to be promulgated in its current form.

"The fact that in terms of the Bill, the State will have the right to expropriate any property, at an amount which the State will determine itself, while the courts will only have the right to review the expropriation process followed, but not the amount on which the State decided, in effect amounts to the legalized theft of property by the State," Kriel added. 

In his opinion, it is even more absurd to note that the Bill will empower the State to expropriate any item or property (such as a house, vehicle or business) in order to give it to someone who does not have such an item or property already, and on top of that will also be able to determine the price paid for it itself, as long as the "correct procedures" are followed.

Kriel pointed to the fact that the Bill's endeavor to take away the courts' authority to rule on the expropriation amount, contravenes Article 25(2)(b) of the Constitution.  This article determines unambiguously that, in case of a lack of consensus about the purchase price, property can only be expropriated at a price determined or approved by the courts.  The right of access to the courts - as contained in Article 34 of the Constitution - of owners influenced detrimentally by a lesser expropriation amount, will according to Kriel also be undermined by this Bill.  "The fact that owners of property are thus left at the mercy of the excessive powers given to State, in effect means that there is no question of the right to just administrative action, as contained in Article 33 of the Constitution," Kriel said.

In AfriForum's comments sent to the Portfolio Committee last week, it is suggested that the principle of willing seller/buyer, rather than expropriation, should be used for policy trends such as land reform.  Kriel alleges that sufficient land and other property are available on the open market for the purposes of reform and that the incompetence of state departments can be held directly accountable for what the State refers to as "too slow progress" in this regard.  "It is unfair to expect of property owners to pay for the inefficiency of the State by means of expropriation," Kriel said.

Statement issued by AfriForum May 19 2008