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Johannesburg - A ruling by the Constitutional Court has exposed the Justice Department for bungling a policy through which it sought to transform the insolvency industry.

In a majority judgment penned by Justice Chris Jafta and delivered on Thursday, the highest court ruled that the policy was flawed in stipulating that its beneficiaries should have became citizens of South Africa before April 27, 1994.

The policy promulgated in 2014 aimed to ensure more black people and white women were appointed as liquidators, instead of the white men who dominate the industry.

In the four categories of intended beneficiaries, the policy emphasised that they should have became South African citizens before the day that ushered in democracy.

Jafta said the policy clearly excluded blacks who became citizens of the country on or after 27 April 1994. The department offered no reasons justifying the exclusion.

Jafta said the policy would fail dismally to bring about change in an industry “which everyone agrees needs to be transformed”.

The policy would in fact exclude thousands of the very same black people it aimed to empower through affirmative action, Jafta said.

It would favour white people because they were automatically citizens of the country before 1994.  

Black insolvency practitioners born after 1994 would be excluded, so would those born in exile and obtained their citizenship after the year of democracy.

“Disadvantaged people who became citizens on 27 April 1994 are denied the benefits of the policy,” said Jafta. 

“And the policy also does not apply to those who became citizens after that date.

“For no apparent reason, and the applicants have provided none, the policy restricts its application to disadvantaged people, who became citizens before 27 April 1994.

“Those who became citizens before 27 April 1994 enjoy the the benefits flowing from the policy.

“It will be recalled that during the apartheid era millions of black people were stripped of their South African citizenship and were declared to be citizens of the so-called independent homelands,” said Jafta.

The policy placed the previously disadvantaged in the same category as white males and affords them the same benefits, he said.

“Again, no reasons were advanced for treating previously disadvantaged people in the same manner as those who were advantaged, in a measure designed to eliminate consequences of unfair discrimination and achieve equality,” Jafta said.

Jafta dismissed the department’s application with costs. The department sought to appeal the judgment of the Supreme of Appeal that found its policy irrational.

The department was up against organisations including the South African Restructuring and Insolvency Practitioners Association, Solidarity and Vereeniging van Regslui vir Afrikaans.

Solidarity described the ruling as a victory against affirmative action.

“This policy is in contrast to a more comprehensive and nuanced approach that is based on merit and training," 

"This racially-obsessed approach furthered racial tension which is not in the interest of the country and its citizens,” said Anton van der Bijl, head of Solidarity’s labour law division"

In his minority judgment, the Constitutional Court’s Justice Mbuyiseli Madlanga vehemently opposed the court’s majority ruling.

Madlanga upheld the department’s appeal. He said leaving it to creditors to determine appointment of liquidators would not transform the industry.

“Experience has shown …  that white people and their entities tend to appoint white people for all manner of activity,” Madlanga said.

“So, factoring the views of creditors at this stage may well have the effect of skewing the appointment patterns and watering down what the policy seeks to achieve.”

The Star