VIEW FROM THE HELM  - April 2004 Issue The tea lady, the gardener and the petrol attendant by Horst Kleinschmidt The lead up to the next round of rights allocations at the end of 2005 runs a close second to the lead up to the general election. Already I notice the frenzy, the positioning and the lobbying. The fact that longer-term rights are even more valuable than four-year rights tells me that the next round of allocations will be as heavily fought over as the 2001 allocation. But let that not serve as a deterrent. Contestation ensures that systems are run fairly, transparently and equitably. In a democratic and open society it is vital that the fishing public has the means to challenge, to test and to question our policy, our administrative measures and of course the outcome of who gets a quota and who is denied one. Contestation is in fact built into the very system we administer. Look at it like this: if you see your way clear to allocate 5,000 rights (broadly), and you attract about 10,000 applicants, then you have paved the way for nearly 5,000 applicants who will be disgruntled and have a vested interest to challenge the system. The question arises, whether you should set up rules to reduce the number of disgruntled or failed applicants (plus those who feel they did not get enough!), or should you open the door of possibilities even further. I do not know the answer to this, but I am sure that we should never return to a system that is shut; where the rules are devised in such a way that only those with rights qualify for ever and a day. The trick is to strike a balance. To open the doors too wide creates unrealistic expectations and has in the past lead to near anarchy and breakdown of all systems. It is for this reason that the recent Constitutional Court judgement is hugely important, when eleven judges rejected the Bato Star Fishing company claim that the Department had not allocated a large enough hake quota to them. Importantly a full bench of the Supreme Court of Appeal also rejected their claim some months earlier. The importance of the Constitutional Court is dealt with elsewhere in this publication. The judgement is most significant as the Department has the sanction and wisdom of the highest court in South Africa to guide the design of the process in terms of which the next round of medium to long term rights will be allocated. Had the Department lost the case a whole new system of allocation would have had to be surmised, something that would have spelt years of renewed instability and turmoil in the industry and effectively would have halted all fishing. Further, the re-design of the allocations process would not provide any assurance of a better or more sustainable result. In short, the Constitutional Court’s unanimous judgement in favour of the medium term right allocation process sanctions our approach to transformation, ensures stability, encourages greater investment in our fishing industry and guarantees the steady supply of our highly sought after fish on international markets. There is another implicit and even more relevant message in all of this. By declaring that the rights allocation process passes constitutional muster, the Constitutional Court confirmed that the process is blind to lobbying and other forms of applying pressure on the Department or its officials and is free of corruption or maladministration. There are sadly, very many out there who make it their business to knock on our doors, somehow believing that the more the ‘clap eyes’ on us, the better their chances of success in the allocations. The ruses, under which they seek meetings, often repeatedly are endless. In the vast number of cases it amounts to lobbying, cajoling, bribes and even implicit threats. May they hear us loudly and clearly: we will not be influenced by such conduct manoeuvres and neither will they enhance their right for a quota. It is important that this however not be construed as an attempt not to meet with stakeholders; on the contrary, we care to meet stakeholder groups where they are representative, have a history of representation and where their members have paid their levies and all other fees required by law to the Department. The preparations for the 2005 allocations have indeed started in earnest. The lead period, as a result of better and more adequate planning has allowed the Department to budget adequately and thus to put in place arrangements for which there was simply no time or funds last time. Through public tender the Department has already appointed three levels of service providers with contracts that have already commenced and expire in mid 2006. Project management specialists have been appointed to manage and oversee the entire process spanning policy design and consultation to appeals. In addition, a fishing rights advisory unit comprising appropriate specialists have been identified and will be put into place during 2005. Finally, the rights verification unit has been appointed with a new mandate, which will focus its activities on high profile forensic audits. Additionally, and in conjunction with the South Africa-Norway co-operation agreement, the Department is supported with the development of detailed policies for each of the fishing sectors in which rights are to be allocated. Draft policies will, within the coming months, be gazetted for comment from stakeholders and eventually be gazetted as final policy, together with the invitation to apply for a commercial fishing right. These initial building blocks, in the form of both capacity and policy development, are crucial elements that build on the benchmark of the 2001 allocation, the availability of key data collected in 2001 and the consequence of more than 40 court challenges the Department successfully defended since then. However, the next allocation is not going to be a re-run of the 2001 allocation. Given the preparatory time and the amount of data available, the next round is aimed to set a new benchmark. Shortly, the Department aims to communicate with existing rights holders, to request them to update the Departments’ information about themselves. This request will also elicit information from rights holders about transformation and economic indicators that will provide the basis for policy for the 2005 allocations. One key element that requires clear articulation is that of transformation of the industry. There should be no doubt in the minds of current right holders as well as prospective new applicants, that the measure of transformation will be enhanced when new rights are to be allocated. The fishing industry should understand in unequivocal terms that the question of rights allocations is, in nearly all respects, equivalent to meeting the terms of the transformation charters in the other industrial sectors of South Africa. As it stands, the index on transformation in the fishing industry appears, on the available evidence, to be higher than other industrial sectors. This is due to a range of reasons, not least as a result of the previous rounds of allocating rights to those with the highest transformation credentials. However, various sectors within the industry and specifically with regard to a range of individual companies, transformation has to be enhanced far beyond the current level. As the Constitutional Court states: transformation is a process and the next round of allocations demands that transformation is further enhanced. Beyond achieving a better ‘figure’ or index of transformation, it is necessary that the allocations outcome enhances significantly the quality of that transformation. We are all aware that there continue to be paper quotas. If anything, they have only tried to go deeper into hiding. We are equally aware that many joint ventures, trusts and other legal constructs are not delivering real empowerment or equity. The Department’s objective will be to further weed out paper quotas. The principle of ‘use it or lose it’ will have to be stringently applied. We will not succumb to the argument that a quota was too small over the past four years to allow for real participation. The point is that there is real value in every right allocated, providing a real basis for co-operation, joint ventures or involvement in one form or another. My argument is with those on both sides of a joint venture – those who allowed themselves to be used as well as those who found ways to exploit others; those who turn up once a month to collect their cheque, as much as those who perpetuate such paper quota arrangements. And then there is the string of companies that told us in 2001 that they had new HDI shareholders and thus they were a transformed entity. In reality we find that many such participation schemes were an apparent sham or turned out to be a sham. It is here that the tea lady, the loyal gardener, the crew of a vessel, the petrol attendant and others were brought into phantom empowerment deals that did little or nothing for transformation. Clever operational and legal acrobatics led to schemes where the empowerment company would never make a profit, where HDI participants have little and sometimes no knowledge of the ‘deal’ they are to benefit from and worst of all, they did not learn of partake in the decisions of the company. Four years is a long time, and those who were involved in fake schemes will have a lot of explaining to do. Transformation cuts both ways: If HDI’s thought that they could come along for a free ride, their days in this industry are numbered; and those who had it good in the past and now found nifty ways to delay real transformation and empowerment, their days are equally numbered. Strong words you might say, but we need to move forward and not find one day that the fishing industry is at the tail end of transformation, market efficiency and global competitiveness.

Click here to subscribe

For subscription enquiries contact Abdeah Parker
For editorials & advertising, please email us.

Email address: info@gwarmanpublications.co.za

For a specimen copy, send us a fax on your company letterhead to:
+27 (0)21- 689 3408