Three hot potatoes for government as legal battles begin

On Monday the Fair-trade Independent Tobacco Association (Fita) issued government with notice that it may bring an urgent application before the high court, to clarify whether cigarette sales are banned in terms of lockdown regulations.

The ban could cost thousands of jobs and more than R1.2 billion in excise revenue to the fiscus, and Fita wants government to explain where it gets its power to shut down the industry.

Trade union Solidarity and civil rights organisation AfriForum have already issued summons on the Department of Tourism and its minister, over race preferences in the distribution of financial relief to small businesses hit by the Covid-19 lockdown.

The AfriForum case is due to be heard on an urgent basis in court today. Solidarity’s case will be heard next week.

‘Disgraceful’

AfriForum CEO Kallie Kriel says it is disgraceful that government has decided to misuse assistance for struggling enterprises to promote a race-based agenda at a time when everyone in the country needs to stand together. He says the Department of Tourism’s racial requirements amount to unfair discrimination and are therefore unconstitutional.

“The expressed aim of the department’s fund is to offer assistance to tourism enterprises that are being adversely affected by Covid-19. Seeing as everyone, notwithstanding their race, is being adversely affected by Covid-19, the department cannot use Section 9(2) of the Constitution, which justifies correction of discrimination from the past, as justification for discriminating assistance against the consequences of Covid-19.”

AfriForum has urged all tourism businesses affected by Covid-19 to apply for relief from government, and if rejected on the basis of BEE requirements, to notify the organisation so that it can mount a legal attack.

Snooker move on cooked food

Over the weekend, the Democratic Alliance (DA) wrote to Trade, Industry and Competition Minister Ebrahim Patel, asking him what legal advice he was relying on to shut down the supply of cooked food.

The DA had been set to approach the North Gauteng High Court to lodge urgent papers to have Patel’s comments in this regard declared unlawful and to seek a personal costs order against him, according to DA Shadow Minister of Trade Dean Macpherson.

But the weekend saw Cooperative Governance and Traditional Affairs Minister Nkosazana Dlamini-Zuma amend the lockdown rules to specifically ban the sale of cooked food.

“This was clearly unlawful,” says Macpherson, adding that Patel had to rely on his cabinet colleague to cure his legal nightmare.

“[This] amendment now makes what was illegal legal, and is short-sighted and mean-spirited, especially for frontline health care workers, members of the security services, essential service workers and transport workers like truck drivers who rely on cooked food due to the work they are doing.”

Macpherson says it is important to ensure that government does not overstep its powers and in the process treat citizens with disrespect.

Business organisation Sakeliga has also threatened to drag Patel to court unless he reverses his pronouncements on the production and sale of “prepared”, “warm” and “cooked” food.

Sakeliga CEO Piet le Roux says the Department of Trade, Industry and Competition’s attempts “to legislate by mere pronouncement are, irrespective of the merits of its instructions, a danger to the rule of law”.

“Even in the face of our unusual circumstances, the principles of constitutionality and legality must be followed.”

Ministers, government officials and public servants are issuing directives without due process and outside the bounds of law, says Le Roux. This is an abuse of power and detracts from public health rather than adding to it.

Sakeliga is offering to subsidise personalised legal opinions for “essential service” providers. The purpose of the legal opinion is to offer businesses legal certainty and provide them with something to present in good faith to law-enforcement officers who might be acting upon unclear or even unlawful instructions.

Adding fuel to the flame

One of the prickliest legal issues is the apparent ban on cigarette sales.

Fita chair Sinen Mnguni says various government officials have issued statements implying that cigarette sales are forbidden during lockdown, but this is not explicitly stated in the emergency regulations. The tobacco organisation representing smaller producers has written to government to ask for clarity on the ban.

“We are constrained to point out that, properly interpreted and despite what state officials have said, the regulations do not prohibit the sale of cigarettes,” says Fita’s letter to the president and other state officials.

It also wants government to explain how a ban on cigarette sales, if it in fact exists, assists in stopping the spread of the Covid-19 virus, and what law empowers government to impose such a ban. It also points out that the sales ban has allowed a black market to flourish, with packets of cigarettes selling for three times their listed price.

Yusuf Abramjee of Tax Justice South Africa (TJSA) says the ban on cigarette sales is costing the fiscus R35 million a day, which means a 35-day lockdown translates into a loss in excise of more than R1.2 billion.

‘Disturbing evidence’

“We have disturbing evidence that rogue cops are conniving with illegal traders, and it is feared that large caches of illicit cigarettes confiscated by police are finding their way back into the market,” says Abramjee.

“President Ramaphosa has rightly earned great respect for his handling of the coronavirus crisis. But this ban is backfiring badly.”

Abramjee adds: “TJSA fully supports a lockdown designed to stop the spread of a virus that could devastate our country. But it’s a painful process and everyone has to buy into it. If the irrational ban on cigarettes is not lifted, we fear that public confidence will be lost and our national sacrifice will be wasted.”

Fita has given the government 24 hours to respond. Depending on the response, Mnguni says an urgent legal challenge may have to be mounted in the high court this week.

Moneyweb is also aware that individual companies deemed ‘non-essential’ as interpreted by public officials, are also planning court challenges to clarify whether they have the right to continue operating.

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