Security firms slam foreign ownership bill

ADT guard. File photo: Matthews Baloyi

ADT guard. File photo: Matthews Baloyi

Published Nov 1, 2012


Johannesburg - An attorney representing a number of players in South Africa’s R50 billion-a-year security industry has threatened legal action if proposed limitations on the foreign ownership of local security companies contained are passed into law.

Martin Hood, of the firm MJ Hood & Associates, has dismissed claims by the drafters of the Private Security Industry Regulation Amendment Bill that the participation of foreign nationals in the private security industry poses a threat to national security.

The bill - tabled earlier this year - proposes that South African citizens must own a stake of at least 51 percent in all private security firms operating in the country.

It also gives the police minister the power to set percentages for ownership across different categories of security services.

Parliament’s police oversight committee held public hearings on Wednesday on the bill, which proposes significant changes to the regulation of the private security industry.

Warning that the limitation on foreign ownership of security companies could send a negative message to investors and have an impact on an “already fragile economy”, Hood on Wednesday called for evidence of a foreign security threat.

“That is absolute rubbish, and until I see evidence of that, I will not accept it, and I would urge the committee not to accept it. You cannot make a broad, sweeping statement to the effect that because of the security threat to the Republic of South Africa, we must remove foreign ownership from local security companies.

“That is unfounded and unjustified… I would like to see the evidence and I would like to see that evidence tested.

“I can also say without hesitation that if there is any limitation of foreign ownership on local security companies, it will go to court. I already have instructions to challenge it.”

Hood also voiced concern that the bill gave the minister too much power, without the necessary public scrutiny and accountability. “If the minister passes a regulation saying that the cash-in-transit industry must be 100 percent locally owned, then you will have certain companies that are partly foreign owned leaving the country.”

Hood said, for example, that Group 4 Security, which was involved in the cash-in-transit and guarding industries, was foreign-owned and the second- or third-largest security company in the country.

Securitas, which was wholly foreign owned, operated in Cape Town and Joburg. ADT was indirectly foreign-owned because its shares were listed on the JSE.

American-owned Chubb Security was the largest armed response provider of services in the country. Hood said imposing the limit could lead to capital flight and disinvestment. He said the purported threat to national security was designed to mislead the committee into accepting a need to make radical changes to the act when there was no such need.

Hood described the Private Security Industry Regulatory Authority as dysfunctional and said there was an attitude of distrust between the regulator and the private security industry.

“This has resulted in a number of instances in litigation where the authority has been found to be in default of proper administrative procedures and has been found to be non-compliant with the Promotion of Administrative Justice Act.”

Sean Tait, of the African Policing Civilian Oversight Forum, said the rise of the private security industry in South Africa had brought about a blurring of private and public policing practices as well as of the policing of private and public spaces.

“This frontline interaction of the private security industry with citizens as well as the increasing presence of private security in public spaces traditionally policed by the SAPS constitutes a significant challenge to regulatory systems that must be addressed,” he said.

The Star

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