Oceana contests what it considers is government’s overly narrow interpretation of BEE.
CAPE TOWN - Fishing company Oceana and the government, represented by the Department of Agriculture Forestry and Fisheries came head to head last month when they met in court to contest what Oceana considers is government’s overly narrow interpretation of black economic empowerment.
At the heart of the matter is that departments transfer policy which allows the holders of fishing rights to sell their rights to another party – subject to certain conditions.
After 1994 the government set about transforming the fishing industry with some gusto. It was a complicated and often emotional process that was not without allegations of political interference and corruption. But the sector is now one of the most transformed in the country. From almost total control by whites, SA’s small-scale and large-scale commercial fisheries were 60% black-owned and managed by 2005.
This is an achievement that the government does not want to see unwound. “The problem with the approach of the application is that it would effectively undo past achievements, and prevent the department from furthering transformation,” the State says in its heads of argument (court papers).
However in the ordinary course of business, trading circumstances are dynamic. People enter an industry and leave it, sell their investments and buy new ones. Sam Montsi, CEO of Montsi Investments, a Cape based investment holding company, is one of these people. He attempted to sell his fishing rights to Blue Continent Products, an Oceana subsidiary. The application for transfer of these rights has been denied.
Oceana is arguing that the policy for the transfer of commercial fishing rights is unlawful. It wants the policy, or certain of its provisions, to be set aside.
The policy states that transfers will be assessed on the basis of “ownership and management control”. Oceana, a level 3 BEE company says this is an overly narrow interpretation of the law. The policy states its criteria more plainly when it goes on to say that applications will be favourably considered if the transferee is “at least as transformed as the transferer”.
Oceana argues that the gazetting of the B-BBEE codes in February 2007 marked a fundamental change in the legal framework regarding B-BBEE and placed the department as well as all other organs of government under a legal obligation to take into account and apply these codes in the measurement of transformation. It adds that these are intended to cover decisions affecting licences and concessions and therefore apply in relation to fishing rights
However, the State is arguing that the codes are not applicable to the transfer of fishing rights. Instead, its transfer policy seeks to guard against the dilution of transformation in the industry. It accuses Oceana of failing to recognise the importance of transformation when it comes to the transfer of fishing rights. “Two issues will be considered: will the transfer lead to the consolidation of rights holders and effort? And how much will the black ownership of that catch change?”
The department also argues that the transfer policy, as policy rather than regulation, does not prescribe hard and fast rules. Instead it affords the department and the minister the flexibility to deal with each application on a case by case basis.
A large part of the argument was taken up with legal technicalities surrounding policy and how it is applied.
It is not clear exactly how many transfer applications are outstanding, but it could be argued that there is a moratorium on the approval of commercial fishing transfers. Just one application has been denied, none have been approved, and the balance is
This was bound to happen. I thought it would happen with Mining. What is interesting is that the regulations are effectively barring a black person from accumulating wealth. In other words - the market is now being limited so that the government can pursue its transformation strategy. Susan Shabangu said something similar, when asked about selling mining rights she stated that a black person must sell to a black person.
Not an easy problem to resolvem, the real issue here is whether the codes have superseded those rights that are legislated. - but we wait for the court outcome with much anticipation.