More than R1 billion spent on commissions of inquiry for such meagre dividends

More than R1 billion. That’s the cost of various commissions of inquiry in recent years, most of them investigating corruption.

commission-of-inquiry-DearSA

The granddaddy of them all is the Zondo Commission of Inquiry into state capture, which has been allocated an additional R130 million to complete its work by March 2021. This is on top of the roughly R700 million spent so far on the inquiry since its formation in early 2018.

Total cost of Zondo Commission: R830 million.

Number of corrupt officials in jail: 0.

To be fair, Zondo has not completed its work and arrests will surely follow. In June this year, Deputy Chief Justice Raymond Zondo asked the Hawks to account for the lack of progress made in recovering the R2.4 billion paid by Passenger Rail Agency of SA (Prasa) to Swifambo Rail easing for locomotives that could not be used because they were too tall for the rail tracks.

Zondo has summoned the Hawks to account for the lack of progress on this, and other, cases.

South Africans are rightly outraged at the regular outpouring of corrupt tales from Zondo and other commissions of inquiry, and the fact that few have been held to account.

Moneyweb reports there were eight arrests related to the looting at VBS Bank, and four executives from Tubular Construction and Eskom were arrested late last year in relation to claims of corruption around contracts awarded for the building of the Kusile Power Station.

That’s about it. A dozen arrests, but no convictions as yet. And a few people lost their jobs.

Is this a decent return on investment on the roughly R1 billion spent on commissions of inquiry over the last few years? Let’s take a look.

Why the cost of Zondo has escalated

We have only a rough idea how the Zondo Commission budget was spent, thanks to answers provided by the ruling party in September last year to questions posed by the DA. Some R244.5 million was spent in the year the commission was set up (2018/19) and R111 million the following year. The big-ticket costs were legal fees (R53 million), investigative tools (R35 million), investigators (R86 million) and “other goods and services” (R95 million).

We don’t have more recent figures, which have obviously ballooned over the last financial year.

In July 2019, President Cyril Ramaphosa set up a special tribunal under the Special Investigations Unit (SIU) to recover an estimated R14.7 billion in looted funds.

Let’s take a look at some of the other commissions of inquiry and assess their overall benefit to the country.

Marikana Inquiry cost R153 million

2012 was a low point for the SA Police Services, when 34 mineworkers were shot and 78 wounded during a violent strike at Lonmin’s Marikana platinum mine in North West province. A Commission of Inquiry was set up in 2012 and sat through till 2015. It was chaired by retired Judge Ian Farlam, and in 2015 issued its findings, which included recommendations of a further inquiry into the fitness of senior police officials to hold office, and referred the killings and assaults to the Director of Public Prosecutions for further investigation.

The cost of the inquiry was R153 million. Police say they acted in self-defence, but issued no apology to the families of the slain miners. There has, however, been a noticeable change in police behaviour in handling violent protests as a result of the Marikana massacre.

Seriti Commission into arms deal cost R130 million

Open Secrets reports that the Seriti Commission in Inquiry into the arms deal, which ran for four years, cost taxpayers more than R130 million. It is reckoned that the arms deal cost South Africa R65 billion, and Judge Willie Seriti, who chaired the inquiry, was accused by more than 40 civil society organisations of conducting a whitewash of corrupt dealmaking by senior political figures in collaboration with international arms companies. Corruption Watch and Open Secrets accused Seriti of failing in his duty to act impartially, failing to hold accountable those accused of corruption and ignoring key evidence. In August 2019 the North Gauteng High Court set aside the findings of the Seriti Commission for its “manifest failure” to hold those responsible for the arms deal to account.

PIC Inquiry cost R54.5 million

The Commission of Inquiry into the PIC was set up in 2019 to investigate any impropriety surrounding investment decisions made by the Public Investment Corporation (PIC). The cost of the commission came to R54.5 million – small change compared to Zondo. The PIC manages more than R2 trillion in funds, predominantly on behalf of public sector workers.

The Commission found multiple irregularities relating to loans and share swaps made to the Sekunjalo Group, and recommended a forensic review of all process involved in transactions with Sekunjalo. Further irregularities were found in the PIC’s R1 billion investment in a Mozambican pal oil plant called S&S Refinery, and a R9.4 billion equity and loan funding transaction to Steinhoff International Holdings. A reading of the final report shows numerous violations of internal policies and irregular funding to business deals, some of them clearly “deals for pals.” The PIC was also heavily invested in the VBS Bank, which was found to have looted municipalities around the country.

As a result of the Inquiry into the PIC, there were some positive outcomes. Dan Matjila resigned as CEO of the PIC in November 2018 while fighting claims of impropriety which are now under an internal investigation. Executive head of listed investments, Fidelis Madavo, and assistant portfolio manager Victor Seanie, were fired over the last year. This followed an internal investigation into a R4.3 billion investment by the PIC into AYO Technology Solutions. Daily Maverick reports that in April 2018, PIC’s executive head of risk management, Paul Magula‚ was fired after being found guilty of poor performance, while executive head for legal counsel‚ governance and compliance, Ernest Nesane‚ resigned.

Nugent Commission of Inquiry cost R8.8 million

Retired Judge Robert Nugent chaired the Commission of Inquiry into tax administration and governance at the SA Revenue Service, at a total cost of R8.8 million. Nugent rounded on former tax commissioner Tom Moyane who had seized control of Sars and “dismantled the elements of governance one by one.”

The findings are scathing, and point to a pattern of governance failures and weakening revenue collection under his watch. President Ramaphosa fired Moyane in 2018 as a result of the Nugent findings.

A 2014 benchmarking exercise by the International Monetary Fund found that Sars was world class in 15 of 27 categories, and only one rung below good international practice in one of the remaining 12 categories. It was a place of higher calling for many skilled professionals eager to build a new democratic SA, says Nugent’s report.

But by March 2018 it was a shadow of the organisation lauded by the IMF. It reeked of intrigue, fear, suspicion and mistrust. Moyane installed CCTV cameras to surveille his staff, some of whom covered the lenses for fear of ending up in disciplinary hearing for a misdemeanor.

The modernisation programme that had been a decade in the making, replacing the largely paper-based system that preceded it with state-of-the-art computer systems, was summarily stopped when Moyane took over the helm, “with not so much as a word to the person who had been instrumental in creating it.” US-based consulting firm Bain & Co had a destructive hand in dismantling working installations without consulting staff. Bain subsequently repaid R217 million to Sars.

Mokgoro Board of Inquiry into National Prosecuting officials cost R3.6 million

The Mokgoro Board of Inquiry into the fitness of advocates Nomgcobo Jiba and Lawrence Mrwebi to occupy the top positions in the National Prosecuting Authority cost the country R3.6 million. Jiba was accused of being politically captured by former President Jacob Zuma.

The bottom line

Overall, we think this is a rather poor dividend on the more than R1 billion spent over recent years on various commissions of inquiry.

Amendment to law allows the state to prosecute for sexual offences more than 20 years after the fact

sex-offenders-amendment-bill-DearSA

Proposed amendments to the law will make it possible to prosecute sex offenders decades after the offences were committed – unlike the existing Criminal Procedures Act which allows for a 20 year window in which to bring prosecutions.

DearSA requested expert legal opinion on the proposed amendments from attorneys Hurter Spies.” This is a crucial amendment to our criminal legal framework, and we wanted to ensure that the voices of victims are properly heard at the highest levels of government,” says DearSA programme director Rob Hutchinson. “Parliament should be commended for its work in bringing our criminal laws into conformity with the Constitution and our legal opinion reflects that position.”

In keeping with its mandate to ensure broad public participation in all matters governance-related, DearSA requested an expert legal opinion to ensure that ordinary South Africans have a say in the shaping of these legal amendments. The Criminal Procedure Amendment Bill, 2018, was introduced in Parliament on 30 May 2018 as a result of the Constitutional Court judgment delivered in the now infamous “Frankel Eight” case.

However, the Department of Justice and Constitutional Development briefed the Portfolio Committee of Justice and Correctional Services on the proposed amendment without asking interested parties to comment. DearSA believes these amendments are of broad public interest and are therefore deserving of public comment.

The proposed amendments will also broaden the net of sex victims to include not just children, but adults. This follows a Constitutional Court ruling in 2018 that required Parliament to amend a number of laws to conform with the Constitution.

The genesis of these amendments goes back to the infamous case of Sidney Frankel, the billionaire former stockbroker, who died in 2017 before having a chance to face eight accusers who claimed they had been sexually assaulted and raped as children.

The so-called Frankel Eight came forward in 2013 with startling allegations against the former stockbroker.  They alleged they had been sexually assaulted by Frankel between 1970 and 1989 when they were aged between 6 and 15 years old and had suffered physical, emotional, and psychological trauma thereafter.

Frankel passed away in April 2017 shortly before getting his day in court, but he would in any event be able to claim that the 20 year ”prescription” since the time of the sexual abuse had lapsed. In other words, the victims had waited too long to bring their claims of criminal sexual assault.

The Director of Public Prosecutions for Gauteng refused to bring a prosecution against Frankel on the grounds that the Criminal Procedures Act debars prosecution for sex crimes more than 20 years after the fact.

Not satisfied with this outcome, the Frankel Eight in 2017 brought a case before the Johannesburg High Court to have the 20 year prescription (time period allowed for the launching of legal proceedings) outlined in the Criminal Procedure Act (CPA) of 1977 declared unconstitutional.

The legal case was a success, the court ruling that section 18 of the Criminal Procedure Act was unconstitutional in barring victims of sexual abuse from launching legal proceedings after a period of 20 years had elapsed from the time the offence was committed.

The finding was appealed by the estate of Sidney Frankel, and eventually found its way to the Constitutional Court for confirmation of the Joburg High Court’s ruling. The Joburg High Court also ruled that not only was the 20 year prescription unconstitutional, but also the law fact that relevant sections of the CPA applied only to children.

The Constitutional Court agreed with the Joburg High Court and gave Parliament 24 months to amend the section 18 of the CPA so that it conforms with the Constitution.

In January 2019, Parliament decided to draft amendments to section 18 of the Criminal Procedure Act, 1977, and section 12 of the Prescription Act, 1969.

The amendment to the CPA extends the list of sexual offences for which prescription does not apply. In other words, there will be no longer be a 20 year expiration date for bringing legal action, and the range of sex offences will be broadened considerably.

Amendments to the Prescription Act will make it possible for victims of sexual offences o institute legal proceedings even where they have deemed to have suffered ‘‘mental or intellectual disability, disorder or incapacity’’, rather than “insanity” as in the current wording of the Act.

The range of sexual offences for which prosecutions may be instituted include rape, compelled rape (where someone is compelled to witness a sex act) or using a child or person who is mentally disabled for pornographic purposes.

Perpetrators of sexual offences may now be subject to both criminal and civil proceedings on a wider range of offences, irrespective of when the crimes took place.

The purpose of these amendments is to encourage survivors of sexual offences to reports these matters so that perpetrators are not left to roam free.

“We are also cognisant of the fact that our criminal justice system still has to undergo more substantive reforms in order to systemically address any secondary victimization experienced by survivors in the criminal justice system,” says Daniel Eloff, attorney with Hurter Spies. “We believe the proposed amendments will undoubtedly pass constitutional muster as it is a direct response to a declaration of unconstitutionality by the Constitutional Court.”

 

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We can’t pay R5bn sin taxes, says alcohol industry

By CAIPHUS KGOSANA and GRAEME HOSKEN – TimesLive

As the war over the ban on booze sales heats up, the alcohol industry has asked the government to suspend R5bn in sin-tax obligations until it is allowed to trade again.

DearSA-alcohol-ban

In a separate development, a scientist on the ministerial advisory committee (MAC) — which advises the minister of health, Zweli Mkhize, on Covid-19 issues — criticised the science used to justify reimposing the sales ban.

And professor Charles Parry, a director at the Medical Research Council (MRC), said he was surprised by the outright ban because the council had recommended only tighter restrictions on sales.

The National Liquor Traders Council, the South African Liquor Brandowners Association, the Beer Association of SA and Vinpro — a non-profit company representing 2,500 wine producers, cellars and industry stakeholders — have written to finance minister Tito Mboweni and the South African Revenue Service (Sars) saying the renewed ban on alcohol sales had left them no choice but to apply for deferment of duties payable for July and August. The organisations represent such companies as South African Breweries, Distell and Diageo.

Liquor industry spokesperson Sibani Mngadi said alcohol excise tax was imposed at the point of production, meaning the industry was liable for excise duties worth R2.5bn in July and another R2.5bn in August on products that are in warehouses and cannot be sold.

“The industry and its entire value chain are facing an enormous financial crisis, and its capacity to make these payments is severely constrained. The sustainability of the sector, now and in the post-Covid era, is dependent on this deferment if job losses are to be avoided,” Mngadi said.

President Cyril Ramaphosa announced the immediate reinstatement of the ban on alcohol sales last Sunday, citing a sharp increase in trauma unit admissions since the ban was lifted on June 1. This had put extra pressure on facilities that were struggling to cope with the coronavirus pandemic.

The government is already facing a cash crunch due to plunging tax revenues caused by the struggling economy. Tabling his supplementary budget last month, Mboweni said SA would miss its original revenue target by more than R300bn this year.

Mboweni’s spokesperson, Mashudu Masutha, had not responded to questions about the liquor industry’s appeal by the time of going to press.
Estimates show the industry contributed R51bn in indirect taxes in 2019, with just over R33bn in excise duties and R17bn in value added tax (VAT).

The fiscus is also not collecting excise duties on tobacco, since a ban on the sale of these products was imposed when the lockdown was first introduced at the end of March. It is estimated that R4bn in tobacco excise duties has already been lost.

Bernard Mofokeng, tax partner at CMS RM Partners, said Sars was generally reluctant to allow postponement of excise duty and VAT payments because these taxes were susceptible to fraud.

“There is so much fraud in liquor and tobacco products, government is losing billions. It is already undercollecting,” he said.

Mngadi said the liquor industry was aggrieved about not having been consulted over the renewed ban. “We reiterate our commitment to partner with the government to create a social compact that drives behavioural change regarding the use and consumption of alcohol,” he said.

Professor Francois Venter of the Wits University Reproductive Health & HIV Institute, who is a member of the MAC, but not speaking as a MAC member, said traffic accidents were also to blame for trauma admissions.

“Look at admissions to hospitals when lockdown level 4 was in place and alcohol was banned. There were increasing trauma admissions related to vehicle accidents.

“People argue hospital beds are being protected, which is fair, but the unintended consequences need to be taken into account.”

Another member of the MAC, who asked not to be named, said there were major disagreements within the advisory body over the science relied upon to impose the ban.

“The slides we and the rest of the country were shown was half-baked science presented by known prohibitionists,” this person said. “If South Africans knew they would be furious, especially the alcohol industry.”

This council member said politicians were using the MAC to pass legislation based on dubious science. “The ban was definitely political. It points to the police and other law enforcement agencies being unable to police properly, especially around shebeens and drunk driving.”

Parry said the MRC had recommended tighter curbs on hours of sale for alcohol but not an outright ban.

“Our findings called for government to go the lighter route and tighten up on sale days rather than an outright ban because of the pushback that would come from people and the liquor industry,” he said. “It looks like government ran out of time. Honestly speaking, I was surprised by the ban.”

But Parry said it was irrefutable that banning or restricting alcohol sales led to declines in hospital admissions.

“[Research] showed the increase in admissions when the ban was lifted. Some hospitals in KwaZulu-Natal recorded 100% increases. Some Gauteng hospitals had 500% increases. Some Western Cape hospitals experienced a 60% admissions increase.”

He said that before the lockdown there were on average 42,700 trauma admissions a week in SA, across nearly 400 public tertiary hospitals.

“Of the alcohol-related admissions, 38% are violence related, 13% are accidents such as falls, 6% vehicle accidents and 2% self-harm,” Parry said.
“Each of these injuries has a burden on the health-care system. The cost of treating a stab injury in a state hospital is R5,352. To treat a vehicle-accident victim costs over R25,400, where a person spends one day in ICU and five days in a general ward.”

South Africa could introduce these new drinking laws to combat alcohol abuse

Parliament’s Portfolio Committee on Health has agreed to formulate an ‘action plan’ around the issue of alcohol abuse in South Africa.

BusinessTech

DearSA-alcohol-law

This follows a briefing from the South African Medical Research Council (SAMRC) which found that the reintroduction of the sale of alcohol has led to a significant increase in trauma cases at the country’s hospitals.

Committee chairperson Dr Sibongiseni Dhlomo said that while relatively few South Africans consume alcohol, many of those who do, consume alcohol excessively.

He said that the committee is of the view that South Africa cannot continue to debate the gross domestic product (GDP) benefits of alcohol sales and not talk about ‘the costs of cleaning up’ after alcohol has been abused.

Hospital admissions, intensive care usage, gender-based violence and death all escalate as a result of excessive alcohol consumption, he said.

“The committee has agreed to meet next week to formulate an action plan on the basis of the report.

“This is in line with a letter sent to the Speaker of the National Assembly by a group of academics, researchers and policy specialists offering advice on steps to curb the abuse of alcohol in South Africa. The letter has since been referred to the committee for consideration.”

Policy changes 

While the SAMRC’s presentation primarily focused on the impact of the coronavirus, an accompanying question paper developed by parliament’s internal research unit outlined some of the draft regulations which lawmakers should consider.

“South Africa needs to control alcohol in order to save lives, improve health, and strengthen the economy. This is possible given the listed three draft Bills that require deliberation in order to increase regulation,” the researchers said.

The three draft bills which have previously been mooted include:

  • The Draft Control of Marketing of Alcoholic Beverages Bill of 2013;
  • The Draft Traffic Amendment Bill of 2015;
  • The  Draft Liquor Amendment Bill of 2017.

The Draft Control of Marketing of Alcoholic Beverages Bill primarily deals with advertising, including where alcohol may be sold, what times alcohol advertisements may be shown on TV, and who alcohol may be sold to.

The Draft Liquor Amendment Bill proposes much more wide-reaching changes including:

  • Increasing the drinking age to 21 years;
  • The introduction of a 100-metre radius limitation of trade around educational and religious institutions;
  • Banning of any alcohol sales and advertising on social and small media;
  • The introduction of new liability clause for alcohol-sellers.

Drunk-driving

The Traffic Amendment Bill has already been approved by President Cyril Ramaphosa and is set to be introduced before the end of 2020.

Alongside a number of other traffic-related offences, it will create a zero-tolerance approach to drunk driving.

It introduces a total prohibition for the use and consumption of alcohol by all motor vehicle operators on South Africa’s public roads.

The National Road Traffic Act (NRA) currently enables those who have consumed alcohol to get behind the wheel provided they are under the blood alcohol limit.

These laws differentiate between normal drivers and professional drivers (those drivers who hold professional driving permits).

For normal drivers, the concentration of alcohol in any blood specimen must be less than 0.05 gram per 100 millilitres, and in the case of a professional driver, less than 0.02 gram per 100 millilitres.

The new laws would make this limit zero in both cases.

FITA heads to Supreme Court of Appeal over tobacco ban

DearSA - NDZ

Cape Town – The Fair-Trade Independent Tobacco Association has asked for urgent leave to appeal the high court’s dismissal of its challenge of the ban on cigarette sales in the Supreme Court of Appeal.

Fita, in its application, said the North Gauteng High Court erred in interpretation of the threshold for concept of necessity in the Disaster Management Act in terms of which the government declared a state of disaster in response to the Covid-19 pandemic.

It should, Fita said in its papers, have found that the test was whether something was “absolutely necessary”.

The court also erred in its application of the rationality test, which goes towards whether imposing a ban on cigarette sales was rationally linked to the purpose for which the government promulgated regulations in terms of section 27 of the act.

A full bench of the high court in Pretoria held that rationality was not a particularly stringent test and it had been satisfied by Cooperative Governance Minister Nkosazana Dlamini Zuma in her reasoning for prohibiting the sale of tobacco products.

“The question before the Court is rather, having regard to the evidence considered and relied on by the minister, could it be said that there is enough to conclude that the prohibition placed on the sale of tobacco products is justified?” the judges held.

“In our view the answer is clearly in the affirmative.”

Lawyers for the minister argued that, based on the available scientific research, the government imposed the ban to prevent hospitals being overrun with smokers who presented with severe Covid-19 symptoms.

Fita disputed the scientific evidence and has done so again in its application for leave to appeal, but argued that to a large extent it was irrelevant because the rational foundation for the minister’s actions fell away unless it was proven that people had stopped smoking en masse as a result of the prohibition on cigarettes.

“The Court erred in not finding that the ban in the regulations is based on the fundamental false premise that if a certain number of people are prevented from gaining access to cigarettes and tobacco products for a limited period of time they will cease to be ‘smokers’,” the association said.

It is challenging the judgment in its entirety, including the cost order imposed by the court.

Fita said it was challenging the decision to award costs against it because the State expressly did not seek a cost order on the basis that the case was in the public interest.

African News Agency/ANA 

Government chokes on Batsa’s urgent court application

A look at the arguments and evidence it faces. Meanwhile Sars’s tobacco tax revenues continue to go up in smoke …

Original article from Barbara CursonMoneyWeb

BATSA

The urgent application brought by British American Tobacco South Africa (Batsa) to have the ban on the sale of tobacco products set aside has been delayed by President Cyril Ramaphosa and Minister of Cooperative Governance and Traditional Affairs (Cogta) Dr Nkosazana Dlamini-Zuma for some six weeks because of “scheduling complications”.

Perhaps the president and the minister lost their eagerness to be heard in court when they received Batsa’s replying affidavit and realised what they were up against.

After all, they would be required to come up with evidence to support all aspects of the tobacco ban, including how decisions were made.

It is questionable whether they had even gone through Batsa’s founding affidavit and the some 500 accompanying pages of documents that were submitted on May 20.

Inexplicable

Batsa has described the decision to delay this urgent application to lift the tobacco sales ban as “inexplicable” and “worrying”.

Taxpayers should also be concerned, as they will be required to cough up the difference.

But perhaps the most concerned should be the Government Employees Pension Fund (GEPF) members, as they are the ultimate passive sitting ducks.

As for the South African Revenue Service (Sars), it is going deeper into the red, and it’s unlikely it will be receiving any taxes from the illicit tobacco dealers. Sars, unsurprisingly, declined to comment as: “The matter you are enquiring about is before the court … ”

Batsa claims that this six-week delay will cost South Africa more than R1.4 billion in excise taxes alone, and thousands of jobs.

“This delaying of justice and a resolution of this issue is inexplicable. By the time the case is heard the ban will have been in place for four and half months during which time billions of illegal cigarettes will have been sold,” said Johnny Moloto of Batsa.

The applicants in Batsa’s matter (the application) cover the entire value chain for tobacco and vaping products, including agricultural, manufacturing, retail and consumer sectors. This application is also made in the interests of a group of persons who are not in a position to litigate in their own interests (per section 38(c) of the Constitution), as well as in the public interest (per section 38(e) of the Constitution).

The purpose of the application is to set aside Regulation 45, which prohibits the sale of tobacco and vaping products during Alert Level 3 as it violates a series of fundamental rights, and is thus unconstitutional. Further, the regulation is irregular in terms of the principles of administrative law.

Even vaping products that do not contain tobacco are restricted in the same way as tobacco products.

Timeline marked by no response, no reply

Prior to the commencement of lockdown on March 26, the Department of Trade Industry and Competition (DTIC) announced that a limited range of goods would be available for sale during the lockdown period. Batsa wrote to the Minister of Small Development and the Minister of Finance on March 24 requesting that tobacco products be included in the list of basic goods that can be manufactured and sold during the lockdown. Batsa also wrote to the DTIC on March 25 following the publication of the amended regulations. No replies were received to these letters.

There were divergent opinions between the Western Cape Provincial Government and DTIC on whether tobacco products could be sold. On April 23, the president addressed the nation to give an update on the government’s response to the Covid-19 pandemic. He announced that cigarettes could be sold from May 1, “when the country moves to Level 4 … ”

A draft framework for all five alert levels, called The Risk Adjusted Strategy was published on April 20. Alert Level 4 included tobacco products as goods that could be sold.

The Risk Adjusted Strategy called for public comment.

Hence, Batsa submitted a written representations expressing gratitude that tobacco products could be sold, and added that Alert Level 4 would allow the harvesting, processing, manufacturing and sale of tobacco products, and also cited a range of factors to support the lifting of the prohibition. Batsa also commented that there was insufficient evidence on the impact of smoking and vaping on Covid-19. No reply was received.

Meanwhile, Batsa’s operations immediately went into action, and between April 29 and May 4, orders to the value of R293 million were captured.

“In an extremely volte-face”, the minister announced on April 29 that the prohibition of the sale of tobacco and vaping products would continue.

In an attempt to embark on an engagement process, Batsa addressed further submissions to the president. No reply was received.

Batsa CEO Andre Joubert, in the founding affidavit: “The continued prohibition on the sale of tobacco and vaping products causes harm not only to individual consumers, but also to Batsa, the tobacco industry and the fiscus.”

Arguments and evidence to be led in court

These include:

Evidence on the impact on consumers:

  • An affidavit deposed by Dr Chris Proctor on the harm caused by the prohibition to the emotional well-being on consumers of tobacco and other products. Countries such as Italy, France, Switzerland and Spain have classified outlets that sell tobacco products as essential during lockdown.
  • A research report compiled by an independent research body, which estimates that 90% of smokers will continue to purchase cigarettes during lockdown.

The impact on the tobacco industry:

  • There are over 200 commercial tobacco farmers, and 150 emerging tobacco farmers in South Africa. These farmers provide approximately 8 000 jobs. The dependents are estimated to number more than 30 000, primarily in rural areas. Tobacco farmers are also excluded from the R1.2 billion disaster fund made available to assist South African farmers.
  • Batsa’s total revenue loss exceeds R2 billion in a nine-week period.

Regulation 45 is unconstitutional and amounts to an arbitrary deprivation of property:

  • It is an unjustifiable limitation on the rights of farmers and tobacconists to choose their trade, it constitutes an arbitrary deprivation of the property rights of participants in the tobacco and vaping supply chain, and it amounts to an unconstitutional infringement of the rights of consumers.
  • The recently harvested tobacco crop will go to waste, while tobacco farms, manufacturers and wholesalers cannot make productive use of their facilities.
  • Section 22 of the Constitution protects one’s right to choose and practice a trade, occupation and profession.

Administrative action:

  • The making of regulations constitutes “administrative action” within the meaning of the Promotion of Administrative Justice Act (Paja). It must also comply with the principles of legality.
  • The minister will have to show that, in making the regulations, she complied with Section 27(2) of the Disaster Management Act; that the minister has the power to make regulations “after consulting with the responsible cabinet member”. For example, does a collective decision of the National Coronavirus Command Council (NCCC) fall within the ambit of this section, or did the minister unlawfully abdicate to the NCCC a power that is vested in her?

Section 27 of the act:

  • This section provides that the minister may make regulations regarding the “sale, dispensing or transportation of alcoholic beverages in the disaster stricken or threatened area”, but not of other goods, such as tobacco or vaping products.
  • “Prohibiting the sale of those products must be rational, reasonable and not motivated by unlawful purpose, whether in terms of Paja or in terms of the principle of legality.”

Regulation 45 inflicts harm on consumers and on participants in the tobacco/vaping supply chain:

  • Is this harm necessary to avoid a greater harm that would occur if tobacco and vaping products were to be sold?
  • The minister had concern about the sharing of cigarettes; however, illicit cigarettes will continue to be shared.
  • Even if smoking increases the risk of contracting Covid-19 or exacerbates the severity of the disease (which Batsa does not accept), any adverse consequences of smoking would not be reversed by not smoking during the lockdown.
  • The minister should have given Batsa and other interested parties an opportunity to comment on the scientific studies that she relied on.

Procedural fairness:

  • The tobacco industry and the consumers of tobacco and vaping products have never been invited to comment, or to make submissions, notwithstanding the fact that the only items that cannot be sold under Alert Level 3 are tobacco and vaping products.
  • As a comparison, the liquor industry was given an opportunity to engage.

Various scientific studies and research papers have been submitted on the relationship between smoking and Covid-19.

Loss of tax revenue

The total loss of revenue of all the parties involved in the tobacco industry (farmers, manufacturers, wholesalers, suppliers, commission earners, employees), and hence, the loss in tax revenue, is incalculable.

For Batsa alone, every week of no sales results in approximately R350 million of revenue lost. Batsa estimates that in relation to Batsa alone, Sars would lose Vat of about R50 million per week, and excise duty losses of about R214 million per week.

The illicit cigarette trade is booming, and it will be difficult to stamp this out. It is to be noted that Sars recently discontinued the tender process for the track and trace system.