Moneyweb (South Africa)
Italian lawsuit against SA government reinforces historical injustice
29 March 2007
National Union of Mineworkers (NUM)
Finstone Ltd SA, a foreign mining company based in Luxembourg, is suing the South African government for an alleged expropriation of its mineral rights. Finstone is a holding company in control of three South African granite producing operations i.e. Marlin, Red Graniti and Kelgran.
The legal action was formally instituted on the 8 January 2007 with the World Bank’s International Centre for settlement of Investment Disputes (CSID). The real challenge posed by this legal action is that the abovementioned investors find the black economic empowerment programme is in violation of the bilateral treaties signed with South Africa by both Luxembourg and Italy.
It is argued that the investment treaties as indicated above inherently protect the claimants. As a result expropriation, as is alleged, is a violation of the protection contained in the investment treaties.
Furthermore, individual Italian investors are also alleging breach of the investment treaty between South Africa and Italy.
The claimants argue that the Minerals and Petroleum Resources Development Act implemented in May 2004 by government effectively led to expropriation of their mineral rights without providing sufficient, capable compensation extemporaneously in terms of the protection contained in the binational
investment agreements. The allegation further holds that the SA government is effectively discriminating against these claimants, a view strengthened, as is argued, by lack of equitable and fair treatment as required by the protection clause per the investment agreements.
The National Union of Mineworkers has been following this dispute with concern due to the general implications of the legal actions against the state .The union also would want to express its observation of the commonality of attitude between some South African mining and the foreign investors. An attitude to cajole government into conceding a special dispensation for some companies whose managers are driven by superiority complex. The conduct of the international claimants in this regard is far from being unique.
An attempt to invoke emotions of discrimination and equalling that to the discrimination suffered by those referred to as historically disadvantaged individuals is silly and must be condemned with the contempt it deserves. As labour and an interested party in the dynamics of the industry we continue to support the mining charter and therefore support the empowerment elements which calls for 26% ownership by those historically disadvantaged in the stakes of mining companies.
We view this exercise as part of redressing the national grievance and the abovementioned percentage is grossly disproportional to redressing that national question adequately. In our view government has been very sympathetic and understanding to the interest of capital both nationally and internationally .It is this sympathy to capital that is compromising the very democratic government. The envisaged empowerment percentage by the charter is far from assisting the challenge of redress and national grievance.
It should have been expected that companies investing in South Africa post 1994 would understand and appreciate the challenges faced by the country and would therefore be willing in whatever positive way to contributing in the provision of funds, training, job creation, and the development of our country.
The law suit raised by the claimants among other potential consequences would milk dry the public coffers which the state needs for development. Effectively, the law suit would contribute in the worsening of the plight of the poor who rely on public resources and state intervention for their daily livelihood. This foreign expedition is a brutal honey-hunting endeavour at all costs consistent with past colonial practices which ripped our mineral resources without contributing positively to the development of the exploited and their countries.
The fact that the claimants invested in South Africa post the demise of Apartheid status quo therefore they did not benefit from the historical injustice perpetuated against the indigenous people is not sufficient argument to seek exoneration for contributing to redress of the national grievance and development of the country.
As NUM we believe that other avenues of engagement should have been explored by the claimants besides the bilateral exchange between the disputants. For example, widening the net of discourse to include active and direct signatories to the treaty. A leap to a legalistic terrain may undermine the underlying socio political imperatives of our legacy which should be redressed.
The allegation of expropriation and the claim for compensation could set an international precedence with unmitigated financial disaster for the South African state .It is the working poor who will be footing the bill through tax and this does not help in the alleviation of poverty and hunger in a developing society.