Terence Corrigan.
The "Fact Check", published on 26 February, plays off the campaign by the DA to mobilise against the Expropriation Bill; it seems, though, to be less geared towards explaining this prospective legislation than justifying it.
It responds to the DA's claims by sourcing comment directly from two individuals broadly supportive of the bill, while quoting previous remarks from a third. Critical voices on this issue are not included. The Institute of Race Relations holds no brief for the DA, but has profound concerns about the pending legislation.
"Will the state be able to seize anything you own?" reads the headline.
This is an important question. Most of the commentary around the bill – and the bulk of it in your article – revolves around how it will relate to land. Elton Hart of the University of Johannesburg is quoted as stating: "The Bill seeks to address land redistribution that is just and equitable in the South African context. It only deals with land redistribution, nothing else."
This is false. Perhaps Hart is quoted incorrectly or out of context, but it is a remarkable misreading of the bill. (A matter for a fact check?)
Property, the bill states unambiguously, "is not limited to land". Expropriation is a power that can be exercised over property. This includes all assets.
It is true that the bill contains a number of clauses specific to land, including the provisions dealing with circumstances in which "nil compensation" might be paid. But it could be misplaced to take comfort in this. The list of circumstances provided in the bill under which this can be done – given in the article – is an open one. The grounds for paying "nil" compensation are expressly "not limited to" those listed. These are examples of the factors that might be considered, along with a potentially expansive set of others.
Even those conditions listed in the bill should raise concerns. Consider Section 12 (3) (c), "where an owner has abandoned the land by failing to exercise control over it." At first glance this might suggest derelict buildings in decaying urban centres. Yet control can be and is lost in other ways. Land invasions are a constant threat to landholders, large and small. The phenomenon is frequently organised, and greeted with indifference or powerlessness by the state and its agents, sometimes even by outright cooperation. About which more below…
And although EWC – in the sense of confiscation via "nil" compensation – is emblematic of the danger this bill poses, it is not the only or necessarily the most virulent danger. The bill creates an expropriation process weighted in favour of the state. It prescribes a series of steps to be taken – yes, including negotiations – but ultimately with the understanding that the state will get what it wants.
Thus, when agreement is not possible and the state moves to expropriate, it will issue a notice of expropriation, specifying the dates on which ownership and the right to possess the property will pass to it. This could involve mere weeks or even days. The only limit on this is that the date when ownership is transferred "must not be earlier than the date of service" of the notice.
Recourse to the courts is provided for, but it remains to be seen how this will play out. (It is worth remembering that just prior to the pandemic, the ANC indicated that it wanted the constitutional amendment to vest expropriation powers in the executive to the exclusion of the courts.)
For many people this will be a prohibitively expensive option. Moreover, a challenge to the quantum of compensation offered does not impact the date of transfer. "Any delay in payment of compensation to the expropriated owner or expropriated holder … or any other dispute arising will not prevent the passing of the right to possession to the expropriating authority…unless a court orders otherwise."
So, a court challenge may need to be made after the asset has already been taken. Court challenges are in any event expensive, all the more so when seen against the loss of an asset. The onus of proof will almost certainly rest on the property owner who is disputing the expropriation. So, altogether, this will be a very difficult thing to do, unless the owner has considerable resources to fund it. For most, these provisions in the bill will create substantial pressures to settle and take what is on offer. It's not unreasonable to infer that this is the intent behind them.
But if the manner in which expropriation may be applied is concerning, perhaps even more so is what it may not cover. The definition of expropriation provided in the bill is as follows: "The compulsory acquisition of property by an expropriating authority or an organ of state upon request to an expropriating authority."
Built into this is the idea of ownership passing onto the state. As we at the IRR have repeatedly argued, this definition seeks to draw a technical and artificial distinction between the taking of ownership by the state – which counts as an expropriation requiring "just" compensation – and the state's assumption of custodianship, which does not.
This definition has its origins in the 2013 Agri SA case, in which a majority of judges of the Constitutional Court held that the taking of property (in this case, mineral rights) should not be regarded as expropriation where the state assumes "custodianship". "...whatever 'custodian' means, it does not mean that the state has acquired and thus has become owner of the mineral rights concerned".
Where no expropriation has taken place, no compensation need be paid. In other words, it is possible to have your property taken by the state – but in a way that does not amount to 'expropriation' – and then to find yourself barred from obtaining any compensation.
The judgment was clear that it was addressing the facts before it, and did not intend to lay down a universal principle.
However, the judgment has provided a possible avenue for the state to take whole asset classes at minimal cost to itself. The most obvious target is likely to be land, as was recommended by the government's Land Audit report, and, at various times, by senior figures in the government and ANC. (As an aside, government policy on land – in policy, word and deed – is unambiguously premised on state ownership. To argue that this bill and the EWC (expropriation without compensation) drive in general would mean enhanced and expanded private property ownership to those denied it in the past, is to misunderstand or ignore this.)
Hanging over all this is the reality of governance in South Africa today. Scandal has followed scandal, and much of the state veers between venality and dysfunctionality. This bill would empower numerous organs of state – including the country's municipal administrations – with a degree of power over the assets of households and companies that would, to say the least, be imprudent.
A foreshadowing of what this is could mean might be found in the case of the Ekuthuleni in KwaZulu-Natal. A tragic story documented by my colleague, Gabriel Crouse, it concerns a community which had lived on an eponymous 1 100 hectare farm, formerly a Lutheran mission, for decades. In the 1970s, the community had successfully resisted efforts to incorporate the property into the KwaZulu homeland.
Having been denied title deeds, however, the community found itself under the covetous gaze of a traditional leader with apparent links to mining interests. As Crouse tells it, things came to a head amid threats to the community in 2014: "Lucky for them, a police escort arrived in vans and nyalas, along with the heavily armed impi. But the police were there to escort the Ekuthuleni leaders out, not to protect them in their own homes. So, they were taken away, their goods were looted, their cars and homes burned down."
Representatives of the state pushing out those inconveniently occupying something desired by those in power. (The latter having "abandoned the land by having failed to exercise control over it" …) This bill makes this sort of thing, perhaps with a patina of legitimacy, ever more likely, if not inevitable.
And given the state of public finances, the temptation that this will be turned on other assets – more valuable than land – will be a strong one. Think not only land, but the structures on them. Think vehicles and machinery. Think shares in companies. Think savings and pension funds. Think artworks. Think patents.
And when Hart raises concerns that, once passed, this legislation will be used against the poor and vulnerable, he is speaking to a near certainty. This is the reality of governance in South Africa. When something as important as property rights are at stake, cheery optimism seems a poor choice.
- Terence Corrigan is a project manager at the Institute of Race Relations, a liberal think tank that promotes political and economic freedom.
