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. 

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. 

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.