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. 




Tuesday, November 24, 2020

A Fisheries Department at 6s & 7s

        On 24 November 2020, the Fisheries Department under the signature of Sue Middleton (Acting DDG of Fisheries) issued an undated and (unlawful) retrospective exemption notice to all current right holders in those fishery sectors where rights are set to expire on 31 December 2020 and to the former right holders in the South Coast rock lobster fishery. These fishing rights expired on 30 September 2020 and operators in that fishery have effectively been fishing unlawfully since that date. 

The exemption notice is unlawful and invalid in so far as it seeks to apply retrospectively to the South Coast rock lobster sector and regularise fishing from 1 October to 24 November 2020. Neither the DDG (as delegatee), nor the Minister (As the original repository of authority), has the authority to issue exemptions that apply retrospectively. The Marine Living Resources Act does not permit the retrospective application of such powers and as such there is a legal presumption against permitting any law or administrative decision to apply retrospectively. 

As we had previously stated, the Minister is exercising her authority under section 81 of the MLRA to authorise commercial fishing post the termination of fishing rights on 31 December 2020. We have also recorded why we believe that such an act is unlawful and reviewable

However, what we had not expected, is the de facto abandonment of the resource split proposal issued by the Minister on 23 October 2020! This exemption notice has effectively rendered the Minister's gazetted intentions to allocate 100% of the effort in the oyster and mussel sectors, 50% of the effort in the traditional line fish, hake handline and abalone sectors and 25% of the squid effort in 2021 to the small-scale fishing co-operative sector moot

The exemption records that the current right holders in the affected fisheries are "authorised to harvest their allocation in full for the 2020/2021 fishing season..." subject only to the condition that they do so in terms of a section 13 fishing permit. 

Accordingly, there will not be any allocation of effort or quota to small-scale fishing co-operatives in 2021. The current right holders in the traditional linefish, hake handline, abalone, oyster, mussel and squid sectors will continue as they had in 2020, in 2021.  

The confusion, mixed messaging and policy mess just continues unabated.  

 



Monday, November 23, 2020

What is Going to Happen on 1 January 2021 With Fishing "Rights"?

With less than 30 fishing days left before the end of 2020 and the official termination of more than 1000 commercial and small-scale commercial fishing rights, the Department of Fisheries and its Minister continue to remain silent on what will happen come 1 January 2021. The last time the Minister mentioned "fishing rights" was back on 23 July 2020 when she promised that the small-scale commercial fishing allocations in the Western Cape will be completed before the end of 2020. That is another failed undertaking.

Of course, for most of the fisheries, such as tuna, hake trawl, small Pelagics and hake long line, we fully expect the unlawful issuance of "exemptions" which will authorise incumbent right holders to continue fishing despite the termination of section 18 fishing rights. These erstwhile right holders will nonetheless have to apply for section 13 fishing permits and other permits, such as export permits, to continue operating during 2021. 

Of concern however, is what is to become of the 225 traditional line fishers, 150 abalone divers and 50% of hake handline fishers and 25% of squid businesses who stand to lose their authorisations to fish in a month's time because of the Minister's threat to allocate 50% of the effort in all three of these fisheries (and 25% in squid) to "small-scale" co-operatives? 

And which 50%/25% (as in the case of squid) of existing operators will lose their ability to fish in 2021? How is the Minister going to select the "lucky" abalone divers, traditional line fishers, hake handliners and squid fishers? 

Given that the Minister has yet to even understand what is required from the infamous socio-economic impact analyses, she will not know that the average abalone diver supports 3 support crew. The average traditional line fisher employs 10 crew and the average hake handliner, 5 crew. The average squid operation employs approximately 20 crew and support staff. This means that no less than 4000 crewmen will lose their jobs this "festive season". 

AND NO, NONE OF THESE LOST JOBS WILL BE REPLACED BY SMALL-SCALE CO-OPS as none of the existing co-ops in the Northern Cape or Eastern Cape have created a single job or fished a single kilogram of their own quotas. Every right has been hawked to a large fishing company in the case of the Northern Cape lobster co-ops. In the Eastern Cape, the rights are worthless and have not generated a Rand in income as far as we have been able to determine.  

We fully anticipate the squid, abalone and traditional line fisheries to interdict the Minister and halt any attempt at arbitrarily denying current right holders their fishing rights next season. 

The small-scale fishing sector led by the South African United Fishers Front (SAUFF) is also disputing the legality of the Minister's proposals. 

We need to be clear. The Minister's quota split proposal is unlawful and will not stand. To arbitrarily threaten more than 4000 crewmen their jobs given the current hostile social and economic environment in which this country finds itself (thanks to the shocking policies of the ANC) is criminal. To suggest that collapsed fisheries such as abalone and the traditional line fishery, which is a fishery governed under section 16 of the MLRA, can accommodate another 10,000 fishers through the co-operative model is a direct attack on the economic, ecological and biological sustainability principles recorded in section 2 of the MLRA.