Monday, May 17, 2021

Publication of Draft Hake SEIAS: Are They Worth the Paper?

On Friday 14 May 2021, the Department of Environment, Forestry and Fisheries (or whatever it calls itself these days) published three sets of draft Socio-Economic Impact Assessment Surveys (SEIAS) in the demersal shark, hake long line and hake deep sea trawl fishery sectors. On Monday 17 May 2021, a fourth & fifth draft SEIAS for the small pelagic and tuna pole fisheries were published. It is uncertain as to whether any other SEIAS were published as the department has not published any of these documents on its website, in the government gazette or in any newspapers as required by law. 

Comments on each of these five drafts are due at 16h00 on 27 May 2021. It must be noted that as at 15:00 on 17 May 2021, there is no mention of these documents and the comment period on www.environment.gov.za, the Minister's twitter account or the department's official twitter page.  

There is no possible justification or rational reason for such an abbreviated notice and comment period which is a violation of the Promotion of Administrative Justice Act, which requires a minimum 30-day notice and comment time period. PAJA also requires publication of the notices inviting comment in at least one newspaper in each of the four coastal provinces. Emailing the draft documents to industry bodies and to certain individuals simply does not meet legal muster. 

Accordingly, the procedural publication of these drafts is legally flawed and reviewable. Not a good start.

What about the actual content? This initial article will focus on the hake long line and hake trawl SEIAS. We will consider subsequent articles which will focus on the small pelagic and tuna pole SEIAS. 

Our twitter followers will no doubt have seen my scathing remarks about the Friday drafts. The two draft hake SEIAS are truly awful; irrelevant; inapplicable to the sectors concerned; they don't contain ANY social or economic data on the hake fisheries (long line or trawl); they are filled with typos, myth, falsehoods and garbled English. 

The drafts are certainly not SOCIO-ECONOMIC impact ASSESSMENTS of any sort. To make matters worse, the hake long line and hake trawl drafts are identical duplicate copies. Apparently both fisheries are capital intensive and untransformed despite the hake long line fishery being 90% black owned and considered a non-capital intensive Cluster B fishery. The hake trawl fishery is capital intensive and 66% black owned. 

Let's look at the texts for hake trawl and hake long line SEIAS.

Firstly, despite being fundamentally different fisheries on every measurable social and economic indicator, the draft SEIAS for both these fisheries are identical, including the numerous typos and garbled language. 

Secondly, the template used for these SEIAS are socio-economic impact assessments in title only. There is not a single social or economic dataset, analysis or measurable in 17 pages of identical text. That is because the department has embarked upon this FRAP as it had done in 2013 and 2016 - without any actual and proven data. And this is despite the fact that -

  • the 2005 policies mandated regular performance assessments of the fisheries at intervals of between 3 and 5 years to ensure policy and management relevance. Only one of these assessments were ever undertaken - in 2009. But this assessment and its findings are not even referenced by these SEIAS. 
  • the annual permit conditions all make mention of the fact that the department will request socio-economic data from right holders. In 15 years, the department has failed to collate even a single year's data for ANY fishery!
The last detailed socio-economic impact assessment that was undertaken was in 2000 in preparation for the 2001 medium term rights allocation process and the subsequent 2005 long term rights process. Again, this incredibly detailed and comprehensive Economic and Social Sectoral Study (ESS report) should have been consulted but was not.    

An economic and social study of the impact of fishing rights ought at the very minimum to analyse the following types of data:

  • The policy objectives set in 2005: To what extent have these objectives been met, surpassed or not met at all and what are the reasons for this?
  • Understanding regional and local impacts where hake is fished, landed and processed. What are the economic contributions and impacts on regional and local economies as a result of primary, secondary and tertiary impacts, including the value of services procured from local suppliers (catering, vessel maintenance and repair, laundry, retail, etc);
  • Value of investments per ton in vessels, factories, taxes, jobs;
  • Value of products, beneficiation, exports & domestic sales;
  • Value of foreign income generation per ton allocated;
  • Transformation and empowerment, particularly with respect to black ownership; value of profits returned to black shareholders (per ton allocated), skills development and staff empowerment and CSI.
These drafts do not even contemplate such basic analyses. 

Thirdly, the templates used are premised on measuring every single one of the fisheries on 7 largely irrelevant and generic predetermined "priority" objectives such as "education, skills and health", "consolidating the social wage", "spatial integration, human settlements and local government", "social cohesion", building a capable and ethical state and "a better Africa and world"! What complete nonsense within the context of understanding the social and economic impacts of 15 years of hake trawl and long line fishing rights! 

How will do these "priorities" help with policy development, fishing rights allocations and criteria development in any fishery?

Accordingly, the very premise of these draft SEIAS - the identification of "priorities" - is so irrelevant; so inappropriate to fisheries that these "assessments" will fail legal scrutiny.  They certainly will never produce any conceivably appropriate policy and evaluation document. 

Fourthly, the drafts are littered with falsehoods, myths, and bizarrely awful language, such as the repeated use of the apartheid-era term "black groups". Who on earth thought of conjuring up 1980's National Party speak? Then the myths and falsehoods - 

  • that there are "many transgressions" committed by right holders. On what conceivable evidence is this statement of "fact" based? 
  • that the hake long line fishery is capital intensive. That will be news to right holders! Why is it classified as a Cluster B fishery then?
  • that both the hake trawl and long line fisheries require empowerment because "black groups" have been excluded! The hake long line fishery is 90% black owned, having been established in the 1990's (post apartheid fyi). The hake trawl fishery is certified (through the Genesis Audit) as being 66% black controlled; double the levels of 2005;
  • the hake biomass is "fluctuating". It is not;
  • that a declining TAC would cause bankruptcies. It is unclear how this has been measured. Furthermore, the only reason the hake TAC has been reduced is because the department has failed to undertake the annual research surveys. In other words, if a TAC reduction does cause a single bankruptcy, the department's incompetence and ineptitude would be the cause.  (Actually an easy fix);
  • that hake fishing rights are "sub-optimally utilised" because of a "lack of interest";
  • that the monitoring and measuring of "transformation" due to "fronting" and the "corporate veil" is difficult. This is false on a multiplicity of levels. For one, transformation is easily measurable and has been done so since rights were first allocated. The deep sea trawl fishery had its black ownership recently measured and audited. This data has been available to the department. Further, transformation is strictly regulated under the Marine Living Resources Act. And the reference to the "corporate veil" ... is precious! Shame, the poor authors are not aware that the "corporate veil" has nothing to do with shielding the identities of the owners of an entity. It is just tragic.
  • that "most" right holders are not involved in any aspect of the business of fishing and are paper quotas! MOST right holders in the hake fisheries are paper quotas according to the department!! On what conceivable factual basis is this egregious statement based? 
  • that the "wellbeing is taken by non-South African companies who lure the right holders to sign long term catching... agreements"! WOW! Who came up with this xenophobic, mythical crap? And then decided to publish it? 
  • the entire tabular "analysis" under points 1.3 and 1.5 is devoid of fact and relevance. For example, right holder trade in by-catches cause financial flows "outside the country" prejudicing "bona fide South Africans"! Who wrote this garbage? What is a bona fide SA? What is a non-bona fide SA? WOW... again.
Finally, both draft hake SEIAS consider 3 identical options and magically prefer the same option 1 (to review the current rights and to reduce the current rights "equivalent to a number of those rights that were optimally utilised..."). What on earth does this even mean?  

More pertinently, on what actual basis was this option selection premised?  The draft SEIAS do not consider the value of rights, capital intensity of the fishery, investments required, re-capitalisation of vessels and processing factories, levels of transformation, and so forth. 

Accordingly, the conclusion is based on zero analysis, no data, false statements and an entirely irrelevant ream of 34 wasted pages. 

This fishing rights allocation process is still-borne at best. If the minister insists on proceeding based on this garbage, every decision will be reviewed and set aside ... just like we have in the hake inshore trawl and horse mackerel sectors [and neither of these 2016 rights allocations have still been finalised more than 5 years later]. 

Tuesday, March 16, 2021

FRAP NEVER UPDATE: Second Attempt at FRAP Tenders

 On 15 March 2021, the Department of Environment, Forestry and Fisheries published two sets of FRAP-related tenders. One was for the appointment of an IT firm that has to provide an IT solution for the FRAP and the second concerned the appointment of a FRAP "Implementer" that would be responsible for essentially everything from consultations, the conducting of the 12 SEIAS, development of policies and administering the entire FRAP. 

Regardless of the suitability of the TOR's, the question that we have been asked to answer is, can this "start" of the process result in an allocation by year-end. The short answer is a definitive NO!

Here is why.

Firstly, we have had this stillborn issuing of tenders already - back in November 2020. Five months later, we are back to square 1. But let us pretend to be awfully gullible and pretend that come the end of April 2021, the Department appoints two service providers as envisaged and these teams get cracking immediately. (It must be noted that the legal team has not been appointed yet and the November 2020 tender seeking to appoint this team has been cancelled). 

And let us focus exclusively on the FRAP implementer to keep things relatively simple. 

The first substantive task is to START on the 12 fishery specific socio-economic impact assessments. You cant start drafting policies without first understanding the social and economic contexts of each of the fisheries and the communities that depend on them. Let's assume this team deploys a massive contingent of sociologists and economists across the 52 major coastal villages, towns and cities to scientifically analyse the impacts of the 12 fisheries. Let's assume they do this in a rapid 90 days with a further 30 days to produce their analytical reports. That takes us to the end of August 2021. These studies then need to be gazetted for public comment and input. A minimum of 30 days would be required by law for such a consultation process. We are now at the end of September 2021

This analysis will directly inform the development of the fishery sector policies. Let us assume that while the SEIAS were being conducted and prepared, the individual sector and fisheries managers were crafting framework policies and then interpreted and inserted the applicable data into the draft policies within a miraculous 30 days. Let us also assume that staffers were also compiling complementary draft application forms together with the IT firm appointed to oversee the technical aspects of the FRAP.  We are now at the end of October 2021.  

The draft policies and forms must be gazetted for a minimum of 30 days for public consultation. A more realistic timeframe for consultation would be 60 days given that these drafts would have to be "workshopped" amongst members of the fishing industry and potential new entrant applicants. And December cant be counted for consultation given the holidays and the importance of fishing during that period. That consultative process takes us to the end of January 2022. 

Let us assume that the FRAP staff work tirelessly through January and finalise all 12 sector policies, applications forms, application fees and the general policy. A final set of gazettes can then be expected on 1 February 2022, together with the invitation to apply for fishing rights. 

The application period could not conceivably be less than 90 days, which takes us to the end of April 2022

At the very earliest, the first application could be evaluated and scored in April 2022 ... and that is clearly on an extremely wishful timetable. The first fishing rights may only be allocated in June 2022, but I would not bet a rand on that happening. 

If I was a betting man, I would predict that -

1.    The Minister and her department will produce a farcical and irregular single SEIAS in a panic by June 2021, which will be immediately challenged, halting the entire preparatory process. 

2.    Should they ever overcome their inability to produce 12 complex SEAIS analysing the social and economic impacts of 12 very different commercial and small-scale fishing sectors operating in some 52 tiny, medium-sized and metropolitan communities, they will certainly falter at the next hurdle - the production of poorly composed, near-generic fishing sector policies. We have seen the penchant to produce generic, valueless sector policies in 2013 and 2016. 

3. Sometime in 2023/2024, after repeated court losses, the Minister will give up and as we have seen with abalone and "interim relief", simply just issue annual exemptions - a reversion to the failures of the late 1990's. 

(Disclaimer: I have deliberately overlooked the Minister's ongoing failure to resolve the outstanding appeals in the hake inshore trawl and horse mackerel fishing sectors ... more than 4 years since fishing rights were first allocated and subsequent to more than seven successive court losses in only two fishing sectors!)

#FRAP NEVER.   


 

 

Saturday, January 23, 2021

A FRAP UPDATE - NOTHING HAS HAPPENED: SO WHAT NOW?

In November 2020, the Minister of Fisheries published her second revised FRAP timetable having completely missed her own deadlines for the preparation of socio-economic studies and reports and the publication of draft policies by October 2020. 

We stated on the record that the revised timetable is impractical and unattainable.  Neither of the first two milestones set by the Minister have been achieved. This includes the appointment of service providers. 

To date, no right holder or industry association have been communicated with or consulted in any manner whatsoever regarding socio-economic data, policy criteria, frameworks, possible processes and systems that would apply to any FRAP etc. 

When will this government just admit that it does not have the resources and capacity to implement a fishing rights allocation process? We see the same incompetence and destruction (albeit with much more serious consequences) in the mishandling of the COVID-19 pandemic and now with the failed vaccine procurement. What we do see is a lot of unscientific bluster, denial and deceit. 

If the Fisheries Minister would simply commit some time to the mismanagement of fisheries, meet with industry bodies and request their assistance, I am certain it will be forthcoming as right holders simply cannot continue operating on "unbankable" exemptions, unrealistic and eternally revised timetables and rumour. 

This is how we foresee rescuing this rights allocation process:

1. Separate the 13 fisheries into 3 separate allocation streams with different timetables and processes so as to alleviate the financial and administrative burden on the department. Stream 1: Hake trawl, SC lobster, small pelagics, KZN prawn trawl, hake long line, tuna pole, shark demersal & squid. Stream 2: Mussels, oysters & hake handline. Stream 3: Traditional line fish & abalone. [end Jan]

(Regardless of streaming, the 13 SEIS studies and draft policies need to be prepared and finalised by not later than June 2021. This will have to include the resource splits between co-operative and individual small scale fisheries. In fact, I would abandon this fictitious and destructive policy of forcing people to hold rights via co-operatives. It must be a choice dependent on the financial model applicable for each area and what resources are available).

2.  Co-develop policies. While the Minister and her staff focus extensive resources on the production of the 13 SEIS for each sector, they should request the individual fishery sectors represented by their respective industry bodies to POPULATE framework policy and process documents, including scoring criteria. The Minister must set the rules for these processes via Gazette. For example, industry bodies must show evidence of consultation with right holders; the documents must follow a template guideline and answer specific mandates. Each sector can produce these draft policies between February and end April. This will then allow the Minister just under 60 days to formally consult in terms of PAJA. [end June]

3. Possible stream processes

Stream 1 should essentially follow the 2005 on-line and independent audit and verification process. The Department can confirm the audit and verification rules with SAICA who can then issue the applicable instruction to their members. These costs are for each applicant for a Stream 1 right. The department will need to appoint an independent data management company who can provide a secure online platform for the application and data development and management needs. Again, these costs are recoverable from applicants and right holders in terms of Section 25(1) and 25(2) of the MLRA. Stream 1 could be completed by end November with appeals completed by end March at the latest.

Stream 2 fisheries are regionally located low value fisheries with harvesting areas in distinct geographies. Accordingly, applicants from only the adjacent areas should be allowed to apply otherwise you have hundreds of paper quota holders that sit with worthless and unused rights as we have currently in the each of these fisheries. These are low value fisheries and accordingly the process and requirements must be designed to cater for the specific small-scale fisher. A basic smart-phone application app can be quickly and cheaply designed. A decision maker will need to know the following:

1. Are you a new entrant or existing right holder? Depending on the answer, separate questions will require populating for new entrant applicants and existing right holders.

2. For existing right holders, you only want the following information:

        2.1    Name, surname, ID, email, mobile number & physical address

        2.2    The person's self-identified race & gender

        2.3    Current operating / harvesting area

        2.4    How much mussels / oysters / hake did the right holder harvest in 2018 / 2019 & 2020

        2.5    How much income did the right holder generate from fishing in 2018 / 2019 & 2020

        2.6    What fishing related assets does the right holder own (boat, trailer, car, harvesting gear                 etc)

        2.7    What is the replacement value of these assets

        2.8    How many people does the right holder employ part-time and full-time 

        2.9    What is the right holder's daily / weekly / monthly wage bill for staff

        2.10   If granted a right again, what assistance will the right holder require from the department to ensure better catching and earning possibilities. 

 3.     For new entrant applicants, you want to avoid asking questions that are purely aspirational as these are worthless and our courts have already looked upon these negatively. Consider the following:

        3.1    Name, surname, ID, email, mobile number & physical address

        3.2    The person's self-identified race & gender

        3.3    Nominated operating / harvesting area

        3.4    Has the applicant ever paid a fine for violating the MLRA / been convicted of an offence under the MLRA without the option of a fine

        3.5    If granted a right, the applicant must explain how the right will be utilised, the fish processed and sold. 

        3.6    The applicant must list whether it currently owns any fishing / harvesting gear and what the current replacement value for these are. 

For Stream 2 fisheries, there is no need for supporting documents at the application phase. This will ensure a rapid electronic and automated data capturing and scoring process. In addition, and importantly, applicants can apply submitting their applications in the language of their choice which can then be automatically translated back into English for the purposes of data verification. Stream 2 fisheries could be evaluated, scored, verified and decisions issued within 3 weeks.  

Stream 3 fisheries are higher value zonally managed fisheries. As with Stream 2 fisheries, applicants for a Stream 3 fishing right should be required to complete an on-line smart phone-based application form, albeit with a greater emphasis on investments made in fishing gear & vessels. Substantial emphasis must also be placed on harvesting of own quotas and employment & remuneration of crew. 

Each stream should comprise a dedicated team of decision-makers who are experts in the fisheries concerned, legal counsel, business process analysts, IT support, administrative support personnel and audit staff. 

The FRAP process can simply not be managed by way of hard copy applications, which are prohibitively expensive to manage, secure and evaluate. And time simply does not permit for such an archaic system. 


Monday, January 4, 2021

Do Quota Holders Need a Fishing Permit to Fish?

We have a received a number of queries from quota holders (both companies and individual fishers) enquiring as to whether they require a permit to fish. 

Quota holders whose rights expired at midnight on 31 December 2020 have been exempted from the provisions of section 18 of the Marine Living Resources Act until midnight on 31 December 2021. This means that these quota holders can continue fishing DESPITE not having a valid commercial fishing right issued in terms of section 18 of the MLRA. 

Abalone quota holders have been operating without section 18 "rights" since 2013. "Interim relief" quota holders have been doing so since 2007/2008! 

Accordingly, this exemption covers not having a right. And every quota holder whose right expired on 31 December 2020 can continue fishing as if their rights were issued in 2005 and 2013 as being valid until 31 December 2021. 

What about the actual annual fishing permit issued every year in terms of section 13 of the MLRA? On 25 November 2020, the Minister and her department issued an exemption to ALL fishers (foreign, commercial and recreational) that exempts them from requiring a section 13 fishing permit until the end of February 2021. 

Accordingly, you don't need a section 13 fishing permit to fish your quota until at least 1 March 2021.  However, the 25 November Exemption obligates fishers to comply with the 2020 permit conditions, including that they must pay their levies and report fish landings. 


POSTSCRIPT: We have been informed by members of the tuna long line industry that the department's compliance personnel require "proof of application for a fishing permit", a copy of the 25 November Exemption Notice (why this is, is baffling! Does the compliance department not know the content of their own department's exemption notice?) and the 2020 fishing permit. These requirements are unlawful and ultra vires the authority of any compliance officer or departmental manager to try and make up rules. They lack this authority. They can be ignored. The 25 November Exemption Notice did not specify any such conditions and requirements.

Civil servants cannot make up rules and requirements as they choose.

Saturday, December 19, 2020

What if Shareholders / Members of Fishing Corporations Want to Sell Now?

The Department of Fisheries recently unlawfully elected to amend the deadline by which applications for the transfer of fishing rights had to be submitted. That date was brought forward from 31 December 2020 to 11 December 2020. 

The decision unsurprisingly has not elicited a legal challenge from the fishing industry given the industry's ongoing reluctance to challenge an increasingly unlawful and failing Fisheries Department. 

However, bureaucratic failure and incompetence does not end commercial and trade realities. 

So, what happens if a shareholder or member of a fishing corporation wishes to sell their shares/member's interest?

The short answer is that from 1 January 2021 the department and its minister will have absolutely no jurisdiction over regulating the sale of these shares or interest because section 21 of the Marine Living Resources Act and the 2009 Transfer of Commercial Fishing Rights Policy only applies to the sale of shares/interest involving corporations holding fishing rights. With effect from 1 January 2021, corporations in the 12 affected fishing sectors will no longer have fishing rights but will continue to operate in terms of a section 81 exemption (in itself an unlawful regulatory process). An "exemption" is not subject to regulation under section 21 or the Transfer of Rights Policy. 

Accordingly, any shareholder or member of a corporation that currently holds a fishing right, will be able to freely sell and trade their shares / interest after 1 January 2021. 

Tuesday, December 8, 2020

The Minister NOT of Fisheries' Performance Agreement

 On 30 October 2020, the Minister of Environment, Forestry (and Fisheries) signed a "performance agreement" with the President some 20 months after being appointed to this position. The performance agreements for all cabinet minister appear to have been published on either the 7th or 8th of December. Minister Creecy's agreement is accessible here.

The agreement is completely silent on anything related to fisheries management, ocean governance, marine protected areas, aquaculture .... and critically a fishing rights allocation process worth an estimated R140 billion rand affecting 12 fishery sectors and thousands of fishers, fishing companies and jobs! Silent. 

The agreement perhaps gives away the lie that the minister and her department is even seriously planning to allocate fishing rights before 2024 (the end date of the performance agreement)! 

It is quite something to digest that the Minister of Environment, Forestry (and Fisheries) is prepared to publicly state she has no objectives, intentions or plans to do anything related to fisheries and oceans governance between now and 2024. Nothing. 


Wednesday, December 2, 2020

Fishing Rights and Fronting: The Case of African Tuna Traders

South Africa's Broad-Based Black Economic Empowerment Commission confirmed on 25 November 2020 that it had found African Tuna Traders CC, owned and operated by Chris Hamel and Jonathan van Breda, to have used Umbhalo Trading (Pty) Ltd and Homotsego Trading (Pty) Ltd as black-operated fronts in contravention of the Broad-Based Black Economic Empowerment Act ("B-BBEE Act").  

The Commission's investigations revealed that black employees were presented as black shareholders for the purposes of obtaining the fishing rights that African Tuna Traders CC currently trades with in the fishing industry, with no participation or economic interest for these black employees. 

The consequences could be severe for African Tuna Traders CC, Umbhalo Trading (Pty) Ltd and Homotsego Trading (Pty) as their fishing rights could now be cancelled in terms of section 13A of the B-BBEE Act, read with section 28 of the Marine Living Resources Act. 

According to the investigation, African Tuna Trading owns 20% of Umbhalo Trading (Pty) Ltd. The balance of 80% is owned by Homotsego Trading (Pty) Ltd in which Mr Phephe Elias Khekhe and six other black people held 14.29% each as direct shareholders. In practice, the Commission found, all three entities were operated by Jonathan Ronald van Breda and Christopher Fergus Hamel, "without the participation of and/or economic interest to black people who were presented as shareholders."

African Tuna Traders CC has 0% black ownership while Homotsego Trading (Pty) Ltd is dormant and does not have any financial statements. Both Umbhalo Trading (Pty) Ltd and Homotsego Trading (Pty) Ltd were created as empowerment companies but had no employees and the administrative functions for Umbhalo Trading (Pty) Ltd were performed by African Tuna Traders CC. African Tuna Traders CC stated that the only revenue of Umbhalo Trading (Pty) Ltd was from the license fees charged to other related companies on the basis of the fishing rights it holds.

The Commission's findings also expose African Tuna Traders CC, Umbhalo Trading (Pty) Ltd and Homotsego Trading (Pty) Ltd to criminal charges related to fronting and misrepresentation.

The Commission's findings bring to the fore two important issues that concern the South African fishing industry, particularly given that a high value long term fishing rights allocation process is on our horizon.

The first is that fronting and the use of vulnerable black folk as "shareholders" and "directors" by existing right holders is certainly pervasive. We know that working in the industry. What is also pervasive is that the granting of hundreds of economically unviable and tiny fishing rights to many predominantly black companies has created a class of paper quotas and rent-seekers. 

The second is that the department's near singular focus on allocating fishing rights to black owned and managed companies to the near exclusion of assessing anything else creates the vulgar incentive to use  desperate black people who are increasingly and largely the mass of unemployed South Africans as fronts to secure fishing rights.