Private Security Industry Regulation Amendment Bill: Civilian Secretariat for Police & SAPS input

Meeting report

The Acting Chairperson said five departments had been invited to make a submission on the Bill including the Department of Trade and Industry (DTI), National Treasury, the Department of State Security, the Secretariat for Police and SAPS. Previous submissions had asked about South Africa’s existing trade agreements with other countries – but the DTI had not responded and this was not very helpful.

Civilian Secretariat for Police submission: International Perspective on Private Security
Ms Jenni Irish-Qhobosheane, Secretary of Police, covered three areas on private security: the international perspective, the limit on foreign ownership in other countries and the partnership issue between the private security industry and state police.

She said that the 2010/11 Private Security Industry Regulatory Agency (PSIRA) Annual Report stated there were 9 364 private security businesses registered in South Africa but that there were a significant number that were unregistered. There were over two million registered security guards but only 427 174 were active. The growth in the industry was not unique to South Africa as there had been global expansion due to the blurring of public and private space. However, the growth in South Africa had outstripped that of other countries and, as a percentage of GDP, it had the largest in the world. According to PSIRA, there were between 15 000 and 20 000 new members joining the industry each month.

Ms Irish-Qhobosheane said that the industry had diversified, resulting in the blurring of lines between private security, private intelligence and private military. The industry was increasing its performing functions. Different interests from the private security industry and the police meant that private security should never have to replace the police. Police served the public while private security strived for profit. Police had special powers that private security did not have such as legal powers but they did have discretion from their clients. Being profit-driven meant that they favoured the wealthy. Private security shifted social control away from the state and accountability was market-driven whereas the police was scrutinised by public.

She said that in terms of criminality, SAPS had raised problems about private security services including supplying criminals with information, being directly involved in crime, hiring out weapons, being involved in criminal actions aimed at undermining competing companies, issuing fraudulent training or illegal certificates and hits or assassinations on behalf of other people. There had been a voluntary vetting of security officers that were already in the industry by companies which addressed the criminality.

Ms Irish-Qhobosheane said that the UN Commission on Crime Prevention’s Resolution 21/1 of April 2009 emphasised that States had primary responsibility for public order, safety and security but that the work of civilian private security services were potentially highly sensitive and required specific supervision and oversight by governments. It emphasised that providers of private security services may complement the services provided by the criminal justice system in some countries but that it may create challenges for it in other countries. It noted the importance of effective oversight of private security services by competent state authorities to ensure that they were not compromised or misused by criminal elements.

She said that the UN Commission on Crime Prevention and Criminal Justice had met in Abu Dhabi in May 2010 and drafted a report that made a series of recommendations about civilian oversight and monitoring of the private security industry. These included properly defining private security services, defining its activities and responsibilities, defining associated powers of providers and personnel, ensuring that effective regulating mechanisms were established and include a code of conduct for personnel of private security services. It recommended that states consider establishing standards of operation that set minimum standards of eligibility, ensured compliance with all national laws and regulations and provided for appropriate licensing regulations. It also recommended that all levels of government should play a role in the development of crime prevention programmes and that private security should have a complementary role and should have a duty to convey information to law enforcement authorities.

Ms Irish-Qhobosheane said that prior to 1998, there was very little foreign ownership of private security companies operating in South Africa but that the situation had changed dramatically since then and R1.7 billion had been invested into the industry in 2000 alone. Currently, only one of the ten largest security companies was predominantly owned by South Africans, but there was no accurate database on foreign ownership.

She said that there was a trend for African countries and other developing countries to have become targets for foreign owned security companies because there were low wages and high profits could be accrued relative to Europe and North America. Expansion into such countries assisted some of these developed countries’ foreign policy agendas, not only because countries could contract out certain obligations, but also because the presence of their companies could further influence an agenda.

A desktop review of fourteen countries’ legislation and prescripts pertaining to foreign involvement in the private security industry was taken. France only allowed EU nationals to provide security services, Lithuania regulated the operation of foreign owned companies but only from EU member countries while Spain, Portugal, Belgium and Norway had similar regulations only allowing members of the EU or European Economic Area to operate. In Italy, licences may only be issued to an Italian person, individual or company. In Britain, the Private Security Act of 2001 provides for the Secretary of State to provide criteria for the conditions of registration of companies which could be changed at any point. It was not clear what the situation was with US based companies, as they were operating in Britain. In the US, attempts to establish national legislation had been blocked repeatedly and legislation was left to federal states, with most prohibiting registration of security companies and operators that were not US citizens. Brazil, Russia and China also only allowed nationals to operate while Canada also handled regulation at a federal level, with most states requiring Canadian citizenship but some had recently initiated amendments to allow foreigners with work permits to enter the industry. Pakistan had recently moved to outlaw foreign influence, involvement and ownership which resulted in serious pressure being exerted on their government to reconsider.

Ms Irish-Qhobosheane said the Crime Prevention Partnership needed to acknowledge both what the UN said as well as the differences between public and private security. The issue of partnerships between the two had been debated since the late 1980s and there was no clear blueprint that existed internationally. In South Africa, the National Crime Prevention Strategy had called for partnerships but there had only been sporadic partnerships since the 1990s with little documentation and review of their benefits. Most recently, there were specific partnerships in the Honeydew area and in parts of the Eastern Cape but there had been no reports on these. There was a need for more detailed research on this which needed to be guided by key principles. These were that partnerships should be driven and determined by the police and must benefit the entire community, partnerships should not extend the powers of private security, guidelines needed to be developed and partnerships must be properly documented and reviewed.

Discussion
Ms D Kohler-Barnard (DA) asked for an explanation on how the Bill would not damage the economy and how it would be monitored. She thought it was ridiculous and utterly chaotic to ask these companies to hand over 51% of their earnings especially when many of the companies were listed on the stock exchange or were huge companies that had a small security contingent. This would send a horrible precedent for all foreign investors because if one section of the business economy could be forced to hand over 51% of their earnings to the government then it could be possible to take that much profit from any company. This could undermine the country’s investment attractiveness. She wanted to know how it would not damage the economy and how it would be monitored. She understood there was criminality in some of these companies but it was mostly the unregistered companies. She did not understand why they were targeting companies that had been given licences. How could SAPS punish people for hiring private companies to protect their lives. Malls cannot hire SAPS members as security guards. Ms Kohler-Barnard asked why government should control what private companies did and how SAPS would cope with the increase in pressure, if private companies shut down because of the Bill?

Ms Irish-Qhobosheane said that the 51% foreign ownership ruling was very generous and it still allowed foreign involvement. Sales to South African companies or persons would be done over a five year period and the process was therefore not expropriation. Private security companies were created because they could make profits and the demand for private security would not go away if the companies were sold. The legislation required companies to sell and they would not withdraw without selling. There were South African companies in a position to buy such as COIN. Ms Irish-Qhobosheane said that the UN said that states must regulate the private security industry and this was not unique to South Africa.

Mr V Ndlovu (IFP) asked for elaboration on there suddenly being a dramatic increase in foreign ownership of private security companies. Slide 14 appeared to say contradictory things. Mr Ndlovu said on the trends in Africa and developing countries, Slide 15 made a political statement and asked if a factual statement could be provided instead.

Ms Irish-Qhobosheane said that before 1998, the private security industry had a significant history. Between 1996 and 2000, there was a realisation of how profitable the industry was. She would be happy to provide concrete research about the role of private security in Iraq and Afghanistan. The companies had signed with the USA, not the countries involved. There was also UN research available for Africa in conflict zones. It was not a political statement because there were facts to back it up.

Mr Ndlovu asked if PSIRA had a database concerning fraudulent training and if not, why it did not.

Ms Irish-Qhobosheane said that there were no concrete figures but that companies had been deregistered and charged for such behavior. Unless there was a criminal investigation, no data was available.

Mr G Lekgetho (ANC) asked who was in charge of the companies in 1998 when there was little foreign ownership and asked how those numbers were produced. He commented that these private companies did not do what they did for the love of the country but for money. He wanted to know how they could stop this.

Mr Chauke, CEO of PSIRA, said that Clause 11 of the Bill restricted people with criminal records from entering the industry where previously they could enter if their criminal record was five years old. The renewal of registration process would allow PSIRA to pick up on criminals, but currently there was no funding to initiate this process.

Mr P Groenewald (FF) asked if there would be less need for private security if SAPS was better able, rather than private security shifting power away from the state. The lack of reliability of the police was forcing private security companies to protect the citizens of South Africa. He wanted to know if their were specific statistics on criminality in private security companies because it clearly existed in the police force.

Ms Irish-Qhobosheane said that this was an issue that was not unique to the state. Members of the public conducted affairs in private spaces, and responsibility was not with SAPS but private security. This was likewise when the public entered environments where private security regulated the public in private-public spaces such as shopping centres.

He said that it made no sense that they were sure that there was a R1.7 billion investment in 2000 by foreign security companies to buy local companies yet there was no database on how many foreign security companies were in the country. He asked why there was not a database. 

Ms Irish-Qhobosheane said that Security Focus Magazine had published these figures based on research of the industry. The only way that PSIRA could measure was by taking clusters such as the ten largest companies in the industry.

Ms M Molebatsi (ANC) asked for elaboration on Slide 4 on the diversification of private security companies.

Ms Irish-Qhobosheane said that in the past it was easy to classify and regulate different aspects of the industry but now large companies were performing multiple functions. The emphasis used to be on the guarding industry, but this classification no longer existed.

Ms Molebatsi asked for the Secretariat’s view on the infringement of international treaties by the Bill.

Ms Irish-Qhobosheane said that the desktop review only looked at specific legislation and that an answer would require engagement with the DTI. She was aware of required reciprocal relations with Italy.

The Chairperson said that if the Bill was aimed at eliminating the criminal element in private security companies, it was not doing its job. There was nothing in the Bill about having to fingerprint private security guards. When the Bill was passed in 1998, its aim was to regulate these private security companies. They need to re-look at what the Bill says about partnerships. Most of the partnerships were between private companies and metro police and not SAPS. They were told in the presentation that China did not allow foreign private security companies but a subsidiary of ADT was there. She wanted to know how that was possible and if that could be a possible solution in the country.

Ms Irish-Qhobosheane said that there was an increasing need to develop a policy with both of the members of a partnership. The issue with state police authorities needed to be addressed but guidelines between SAPS and the industry were also important.

Ms Kohler-Barnard asked about the clause saying that only South African nationals were allowed to be in private security companies. That was against the Constitution because it said that foreign nationals living in the country have the same rights as citizens except for the right to vote.

The Chairperson said that she had to ask about their information about Spanish security companies. According to the Committee’s information, 38% of Spanish security companies were foreign owned and that was not what the presentation had said.

Ms Irish-Qhobosheane said that private security companies were something that could not be done away with. They were not trying to have the police fill the gap of private security.

The Chairperson interrupted to ask who drafted the Bill because it was very unclear.

Mr Chauke said that PSIRA had drafted the Bill with the assistance of the state law advisors.

The state law advisors pointed out that they had only certified the Bill.

The Chairperson said that PSIRA was refusing to answer this very simple question about drafting. It was extremely concerning that state law advisors were involved with the drafting of the Bill.

Ms Irish-Qhobosheane explained the 51% foreign ownership ruling was very generous and it still allowed foreign involvement. Sales to South African companies or persons would be done over a five-year period and the process was therefore not expropriation. Private security companies were created because they could make profits and the demand for private security would not go away if the companies were sold. The legislation required companies to sell and they would not withdraw without selling. She said that there was no measure of accountability for private security companies as there was for the police. There were no statistics on private security companies in terms of criminality. The United Nations was saying that countries must regulate the private security industry. Most of the private companies were originally South African but were bought up by foreign companies; she cited ADT as one of these companies. She said that very few countries gave accurate information on private security companies and she was not sure how the Committee got their informational on the Spanish companies. The Johannesburg Stock Exchange has their own regulation policies and the Committee may need to engage with someone from the stock exchange. There were South African companies in a position to buy such as COIN.

Ms Irish-Qhobosheane said that ADT entered China but was forced to sell parts of their ownership to local owners to continue to operate there. Ms Irish-Qhobosheane said that regulations would still affect companies on the stock exchange. Local companies existed on it before they were taken over by foreign companies. The Department of Trade and Industry (DTI) had codes which affected companies but it had not meant their complete collapse. An expert would need to be brought in to give a more detailed analysis.

The Chairperson said that she did not think the Stock Exchange issue was problem that they could not overcome.

A member commented that certain persons with criminal records could be in the private security industry – this should not be allowed to occur.


Mr M George (COPE) asked what would happen if foreign companies did not sell within five years. He asked for more clarity on the issue of the stock exchange as it needed a detailed explanation.

Ms Irish-Qhobosheane said there were examples of where this had been done before but that an expert would need to come in to give a detailed explanation on the intricacies of the stock exchange.

Ms Kohler-Barnard said that a forced sale at the end of a five year period was the same as expropriation. She asked for evidence of solid research on the issue of this not affecting the economy.

Ms Kohler-Barnard said that it was insulting that they did not know who exactly wrote the Bill. She also wanted to know what would happen to companies that were huge but had just a tiny security sector. How could they give up half of their company. She also insisted that the Secretariat of the Police tell the Committee about the legal non South African citizens working at these companies.

Ms Irish-Qhobosheane said that there were examples of things like this happening on the stock exchange but she was not an expert.

A member of the delegation said that the Bill was very specific in targeting only security companies.

The Chairperson said that they were missing the point because as the Bill stood it would affect companies like Sony because they make the security equipment.

Ms Irish-Qhobosheane said that extensive research had been done, including using insider information from Security Focus. The industry was based on supply and demand and the technical team had looked at contracted suppliers in the industry and understood their position. It was a highly profitable industry and the shares were not going to become worthless because of the five year period. The industry was increasingly growing and the demand would not disappear.

Ms Kohler-Barnard asked about the rights of foreign residents in relation to the Bill and felt it was xenophobic.

Ms Irish-Qhobosheane said that the issue required engagement with Home Affairs but that the industry was unlike any other because of the security risks involved.

Mr Ndlovu asked for further explanation on foreign agreements that South Africa currently had.

Ms Irish-Qhobosheane said that the technical team was aware of a bilateral agreement with the UK, but had requested a meeting with the DTI and still needed to follow up on this issue.

The Acting Chairperson said that the problematic issues with foreign agreements, resident rights, the stock exchange and funding would be dealt with after the technical team had met with the DTI, the Department of Home Affairs and National Treasury.

South African Police Services (SAPS) submission
Major General Peter Jacobs, SAPS Head: Legal Support, said that SAPS had attended a workshop hosted and presented by PSIRA on the drafting of the Bill. SAPS supported the provision in Clause 18 of the Bill relating to the performance of security officers outside of South Africa. Such an amendment was requested by the parliamentary committee that considered the Prohibition of Mercenary Activities and Regulation of Certain Activities in Country of Armed Conflict Act as that Act only provides for a database of security services in areas of armed conflict. Clause 18 will provide for a database of persons performing security services (which was quite widely phrased) outside the borders of the country. This Act had not been put into operation yet and there were other references in the Bill to Acts not yet in operation, which meant that SAPS would not be able to attend to the Bill as the Foreign Military Assistance Act was still in operation.

He said the provision for providing a database of persons performing security services outside of the borders of the country needed to be strengthened in respect of the regulation of anti-piracy security services, as there were people coming from all over the world to hire services because of the piracy threat in Somalia. Some countries such as the Netherlands placed their own personnel on ships to provide security or hired former members of Special Forces units and in the process, firearms were entering the country through import and export permits. Through the Central Firearms Register, the issue of control over the firearms was being finalised through a policy that was being considered by SAPS management currently. No automatic firearms were being allowed for anti-piracy operations and there was a limit on the number of firearms per ship. The major concern was the personnel moving through the country, as some private security companies from South Africa were providing security services on the ships. The Act would help to regulate these services and create a database for companies operating outside the country but the Act needed to focus more on these anti-piracy operations to improve their regulation.

General Jacobs said that the reference to the Interception and Monitoring Prohibition Act and the Regulation of Interception of Communication and Provision of Communications-related Information Act was incorrect in the Bill, in that the clause created an impression that people were allowed to trade equipment which was prohibited by the Minister of Justice and Constitutional Development. This needed to be excluded.

He said that the issue of partnerships, in principle was very positive and SAPS had always been in favour of cooperation with other bodies that had common interests. However, because of the different motives and objectives of the members of the partnership, such a partnership would promote accusations of corruption within SAPS. Police officials also needed to have the right to enter unaltered crime scenes as security officers were often the first ones to arrive. There was a need for a very clear understanding of what the partnership would entail.

General Jacobs said that SAPS had a problem with security officers using similar uniforms to police officers, although legislation in section 68 of the South African Police Service Act attempted to prevent this. There needed to be better regulation in the private security industry about uniforms to ensure that there was no abuse by security officers.

He said that there was a reference in the Bill to cash-in-transit requirements, and SAPS welcomed this and supported the minimum standards.

In Clause 13, there was reference to an imprisonment of five years but elsewhere in the Bill there was reference to an imprisonment of five years or a fine or both. There needed to be alignment on this matter.

There was an issue with the Bill proposing a database of firearms. SAPS believed there was a lot of scope for improvement of the control of firearms in the private security industry. Many companies changed names and ownership without changing the ownership of firearms. There was need to improve this and the Central Firearms Register could help with this, but there needed to be improved cooperation between PSIRA and SAPS.

Discussion
The Acting Chairperson requested suggested drafting on these issues from SAPS. She requested information on the role the Department was playing in terms of the firearms issue and the uniform issue.

Mr George asked if SAPS was consulted in the drafting of the Bill and if the Central Firearms Control Register was ready.

General Jacobs said that SAPS was invited to a PSIRA consultation meeting where many other organisations including trade unions were also consulted.

Mr Lekgetho asked why SAPS was afraid of partnerships – if there were guidelines that were well documented and benefited communities.

Ms Kohler-Barnard asked for a detailed relationship of the partnership between SAPS and the private security industry.

General Jacobs said that the Bill proposed improved partnerships but that the relationship between SAPS and the private security industry differed from precinct to precinct. The police had a need for such a partnership but it needed to be careful. SAPS believed that it could improve the system with the Firearms Register, with cooperation from the private security industry and welcomed the drafting opportunity.

Mr Ndlovu requested a brief from SAPS after they had consulted with other parties as their submission was very vague.

State Law Advisors Briefing
Mr Theo Hercules, Principal State Law Advisor, noted the changes to clauses resulting from the public submissions.

In Clause 1, the definition of ‘locksmith’ had been questioned and it was agreed to amend it to include key cutting. The law advisors were liaising with the Locksmiths Association of South Africa (LASA) to agree to a new definition. The definition of ‘security officer’ was too broad and would be narrowed. In Paragraph H, the Regulation of the Interception of Communications Act currently referred to the 1992 Act which was repealed and the amendment changed the reference to this repealed Act. This would be changed to reference the correct Act. In Paragraph K, the use of other valuables regarding the cash-in-transit industry was too broad and needed to be narrowed down.

Clause 2 dealt with partnerships and the law advisors needed to wait for the Committee to deliberate on whether there should be partnerships and to what extent they should be catered for, before changing this clause.

In Clause 3, which dealt with reporting, a change would be made to include quarterly reporting.

Clause 5 dealt with staff expansion of PSIRA and the law advisors were looking at proposals which the Minister and the PSIRA Council would have to approve.

On Clause 6 and the payment of levies, the law advisors needed to look at Treasury Regulations and would meet with National Treasury to discuss them.

Clause 9 dealt with the Minister having the power to make exemptions on foreign ownership limits. The law advisors needed to look at the current provision, justification, proposals on the instruction of the Committee, percentages and rights of permanent residents.

In Clause 11, the law advisors needed to look at transitional arrangements for current employees of the industry.

The law advisors needed to liaise with SAPS on Clause 14 to look at alignment with the Firearms Control Act.

Clause 15 also required liaison with SAPS, concerning regulation of security companies outside of South Africa.

The law advisors needed to look at Clause 18 as it related to the Firearms Control Act.

Mr Hercules said that meetings organised with different departments were still coming up and these would clarify many items.

Discussion
Mr George said that there were many concerns raised about constitutional matters at the hearings which the law advisor had said nothing about. Likewise, Mr Hercules had not mentioned the matter of international agreements from a legal point of view.

Mr Ndlovu said that he had thought that only internal issues were discussed and that the law advisors had not yet discussed matters with other departments. He said that in the calculations the position of the Departments of Trade and Industry and International Relations should be included as there was a need to know what their position was.

Ms Kohler-Barnard said the issue of 51% ownership being a potential breach of the Constitution had not been raised by the law advisor. In the list that had been presented, she did not see a myriad of issues being addressed. She did not understand why the state law advisor did not work on those issues and ignored the potential breach of S25 of the Constitution. There was also a need to look at international agreements as there was a breach there. There had also been no mention of the over broad discretion of the Minister of Police who had the ability to change the percentages. Expropriation was the forced transfer of a property and this was what this situation was and she did not know how this was going to be resolved. This was a violation of the Constitution.

The Acting Chairperson said there was no need to crucify anyone at this stage, The point was to identify the provisions that needed to be looked at. Most issues had been covered. She believed that S1(8) was also an issue. The issue of partnerships also needed to be looked at in terms of wording. There was also a need to reflect on the wording surrounding the monitoring of the Bill and the same went to the wording surrounding the issue of the Council. Reporting needed to also be raised in terms of the annual report about what needed to be reported to this Committee. It needed to reflect all the details. She suggested that in terms of S9 that the state law advisors looked at the possibility of drafting something around this as well. The issue of the Minister having to many discretionary powers had been covered. There was also the notion that had been raised by the Committee where the Minister would not be able to deal with anything except exemptions. There needed to be an advisory committee on this matter but not at the level of director general but at the level of people who could do the job. There was also the need to look at the involvement of SAPS and State Security (led by an experienced legal person), Trade and Industry and the involvement of state security lead by a legal person most possibly on the secretariat. She asked for the state law advisors to draft something around this issue as well. The law advisors needed to look at the wording of the definition of ‘security officer’ to ensure it did not include people such as Transnet officials. The wording of the clause concerning partnerships needed to involve SAPS. They need to look at staff expansion as it went further than merely removing the word ‘Deputy Director’ as it was still open to exploitation.

The Acting Chairperson suggested the possibility of an exemption committee to assist the Minister in making exemptions which would cover the Minister having too much discretionary power and not having enough capacity to deal with exemptions. The law advisors needed to look at the requirements of administrative justice to ensure that the Bill would not end up in court. Clause 15 needed to include maritime security and there needed to be alignment with the Mercenary Act. It was clear that the Memorandum of the Bill was not clear and precise enough and needed to be improved. There was a need to re-look at this in terms of the motivation for the Bill and the like. This was important as once this Bill was taken to court it would form part of the documents to over ride the issues raised.

Ms Kohler Barnard wanted an explanation about the threat to national security from participation of foreign nationals. She felt this was a xenophobic notion and she wanted to understand how people living in the country legally could pose a threat.

The Acting Chairperson said she felt this too formed part of looking at the Memorandum. This would also help members understand the thinking behind some of these notions. Too much of the understanding within the Memorandum on the Bill was focused on national security and not enough on what was happening internationally in the United Nations and the like. There was a need to look at it so those questions were answered. There was a need for better wording.

Mr Chauke said that PSIRA was in agreement with the matters raised in the reviews. In terms of the submissions that had been made, a line by line response had been prepared. He asked if time allowed for this presentation.

The Acting Chairperson said that it would be better to hand that presentation out to the members so that they saw what Mr Chauke was talking about. She addressed the state law advisors saying that going forward, things needed to be in writing. When suggestions were made they needed to be in writing and needed to be handed out to members, no matter how short. The Committee could not deal with legislation on a ‘verbatim presentation’. She thus did not know how the ‘line by line’ approach that Mr Chauke proposed would work.

Mr Chauke replied that what had been done was each submission had been taken and for each issue raised, a response accompanied it.

The Acting Chairperson asked for that to be prepared in a document form and that could be tackled in the next meeting. PSIRA and the state law advisors would be given the opportunity to put it in a document form and distribute it to members at the meeting the next day. What the Bill was not doing, which was also a concern of Treasury, was the responsibility to collect levies. The Bill needed to speak to that. That was the only leverage that PSIRA had over the industry but the Levies Act had not been implemented yet and Parliament could not be blamed for that. The Levies Act needed to be implemented and clarified. She said that if there was anything that could be addressed in the legislation then it needed to be addressed. Even the most minimal issues as one could not make regulations surrounding things that were in the Bill.

The meeting was adjourned.