Dr Anthea Jeffery, head of Special Research at the Institute of Race Relations, says the Investment Bill opens the door to expropriation without compensation and is a new Expropriation Bill by another name.
Media coverage of the Promotion and Protection of Investment Bill of 2013 (the Investment Bill) has focused on its role in replacing South Africa’s bilateral investment treaties with various European states. Representatives of these countries have broken their usual diplomatic silence to warn against the reduced protection it gives investors from their states. However, the true significance of the Bill goes very much beyond this.
The Investment Bill is, in fact, a new expropriation measure that will apply to all property owners in South Africa, both local and foreign. It is also likely to result in many people receiving zero compensation on the loss of their property, provided the State takes this, not as owner, but rather as ‘custodian’ for the disadvantaged. In combination with the Restitution of Land Rights Amendment Bill of 2013, it could see property of many kinds taken by the State as ‘custodian’ for land claim- ants and without any compensation to its former owners. Yet most commentary on the Investment Bill has overlooked this risk, helping to lull all property owners into a false sense of security.
A misleadingly named Promotion and Protection of Investment Bill of 2013 was gazetted by the Department of Trade and Industry (DTI) in November last year. The three months allowed for public comment expired at the end of January 2014. Since then, media coverage has been sanguine or absent, helping to obscure the threat posed by the Investment Bill to the property rights of every person, whether local or foreign.
Under the Investment Bill, the rights of domestic property owners will be much reduced. The current Expropriation Act of 1975 gives them the right to full compensation on expropriation, which must include not only the market value of their properties but also compensatory damages for consequential loss. The Act also guarantees them immediate payment of 80% of the compensation due, with interest on the outstanding balance.
Under the Investment Bill, by contrast, expropriated owners will receive less than market value and will have no right to damages for consequential loss. They will also have to wait for the State to make payment in what it regards as ‘a timely manner’.
However, the real danger in the Investment Bill is not that domestic property owners will be confined to ‘just and equitable’ compensation falling somewhat short of market value – but that they will receive no compensation at all.
This danger stems from a key clause in the Investment Bill stating that various actions ‘do not amount to acts of expropriation’. According to the Bill, there will thus be no expropriation where the Government’s actions result ‘in the deprivation of property’ but ‘the State does not acquire ownership’ and ‘there is no permanent destruction of the economic value of the investment’.