DA welcomes moves to rework the Private Security Industry Regulation Amendment (PSIRA) Bill

21 June 2015

The DA welcomes the statement this week by American Ambassador to South Africa, Patrick Gaspard, that he has had assurances from the State that the controversial Private Security Industry Regulation Amendment (PSIRA) Bill will be sent back to Parliament for reworking.

This means the President has finally accepted that the provisions which limit foreign ownership of Private Security Companies under the World Trade Organisation (WTO) General Agreement on Trade in Services (GATS) would be breached by such legislation.

The DA will today write to the President to demand answers on when this unworkable legislation is coming back to be reworked by the Police portfolio committee.

South Africa has undertaken full market access and national treatment commitments with respect to ‘investigation and security’ services which means that WTO organisations must be able to provide these services without restrictions. 

However, while this Bill has languished on the President’s desk since 28th January 2014, the ANC rushed to approve visa regulations via Home Affairs which, five months later, declared that the Security Industry was as undesirable as the exotic entertainment industry, and that no business visas would be granted. This ensures that no foreigner may obtain a business visa to work in the Security Industry. 

Besides preventing any foreigner from moving to SA to work in the Private Security industry, this, in turn, prevents any foreign-owned company from running such a company in SA. It also prevents current foreigners working in the industry in SA from leaving the country as they may be refused re-entry should they leave the country for any reason.

This has successfully destroyed any possible foreign investment in this massive industry, which employs hundreds of thousands of South Africans.

Initially all objections centred around the expropriation clause that forces Private Security (PS) firms to sell at least 51% of their shares to South Africans, and appears to violate these GATS undertakings. This Amendment additionally gives the Minister free rein to expropriate any percentage of any foreign-owned security-related company in South Africa.

Indeed, the South African Police Service (SAPS) Law Advisor confirmed that the law would allow the Minister to expropriate 100% of any foreign-owned security serviced provider. This leaves the door wide open for further corrupt activities enriching the lives of an elite few. 

This limiting of foreign ownership would send strong negative signals to other foreign investors. For example, most security technology, from alarm systems to CCTV systems, are manufactured and distributed by international companies. Additionally, there are Private Security companies on the stock exchange – and the determination of who owns what would be virtually impossible.

Additionally, the DA believes that this Bill would constitute an unlawful expropriation under section 25 of the Constitution. We believe it may also place the government in breach of its obligations under the SA-UK bilateral treaty and the other 45 bilateral investment treaties (BIT).

No research or proof has ever been presented before this Committee showing that private security firms are a threat to national security, despite numerous requests by the DA. 

The private security industry in South Africa is believed to be the largest in the world. It has reached an annual turnover close to the R72-billion annual budget of the SAPS, mostly due to the failure by government to protect its own citizens. The ten largest private security companies operating in South Africa are predominantly foreign-owned companies.

The Private Security Industry Regulation Amendment Bill aimed to regulate the industry by addressing the lack of adequate resources; proper accountability for firearms in possession of its members; security services rendered outside the Republic by South African security companies; and criminality within the private security industry.

The previous Minister of Police determined that foreigners working in this industry could rise up like an army and, without a shred of research or evidence, claimed they were a threat to national security.

Whilst the DA agreed that the private security industry needed to be more regulated, backed by all other opposition parties, we fought restrictions on foreign ownership of private security companies. We agreed that it would have a detrimental effect on the protection of ordinary South Africans and businesses which rely heavily on the private security industry if foreign-owned companies are forced to hand over their business.

The last minute reintroduction of a clause that restricted foreign ownership of security companies to 49%, also gave full power to the Minister to determine the percentage of expropriation (up to 100%) and control in respect of different categories of the security business.

It is a self-defeating attack on our economy using unproven and unjustified claims against private security companies, especially as the nationalisation debate is being watched by global investors.

This Bill is a disaster of national and international proportions. It deters foreign investment, decreases job opportunities and increases the capacity for corruption as companies are forced to hand over majority shareholdings of both one-man and multi-national companies alike. It would have a catastrophic impact on all foreign-owned security business including, but not limited to:

Guarding;

Close protection;

Response security;

Assets in transit;

Event security;

Manufacturers, importers and distributors of monitoring devices;

Private investigators;

Security training;

Electronic;

Security;

Locksmiths; and

Security advisers.

Section 20(2)(c) of the PSIRA Bill states that “a security business may only be registered as a security service provider if at least 51 percent of the ownership and control is exercised by South African citizens.” This is at the sole discretion of the Police Minister who “may prescribe a different percentage – it may be 60, 80, 90 or even 10 percent.” It is this discretionary clause that the DA has long taken issue with.

This means the Minister of Police can, at any time, decide on a whim to expropriate from 10% to 90% of a company of his choosing.

There is a reason why this industry has burgeoned in South Africa. Private security companies are essential in the fight against crime. They free up capacity for the South African Police Service (SAPS) to focus on areas where violent crime is at its highest, and in communities which cannot afford private security. 

There would be no market for the private security industry if the SAPS just did the job they were paid to do. In its present form, the Bill would potentially have led to massive job losses, decreased investment in South Africa and a security risk to all South Africans.

The upshot of the proposed amendments to the Bill would be that fewer trained law enforcement and security personnel would be available. However, the move to shut down foreign-owned Private Security Companies has already begun, and the Home Affairs regulations have started the process via the back door.

The DA will continue the fight against this job-killing legislation until the promised amendments are made.

Statement issued by Dianne Kohler Barnard MP, DA Shadow Minister of Police, June 21 2015