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DISTRIBUTED BY VERITAS Tel: [263] [4] 794478 Fax & Messages [263] [4] 793592 E-mail: [email protected] Veritas makes every effort to ensure the provision of reliable information, but cannot take legal responsibility for information supplied. ADVERSE REPORT OF PARLIAMENTARY LEGAL COMMITTEE ON STATUTORY INSTRUMENT 34/2011 INDIGENISATION AND ECONOMIC EMPOWERMENT (AMENDMENT) REGULATIONS, 2011 1 In pursuit of its constitutional mandate as provided for in section 40B of the Constitution of Zimbabwe, The Parliamentary Legal Committee met on the 12TH of May 2011 at 1200hrs to consider all the Statutory Instruments that were gazetted during the month of April 2011. After deliberations, the Committee unanimously resolved that an adverse report be issued in respect of Statutory Instrument 34/2011 to the following considerations: In the Statutory Instrument under consideration, Clauses 3(b), 4(b), 5(b), and 8 imposes hefty penalties of up to five years imprisonment or level 12 fines. Clause 3(b) states that, “A business which, having been granted an extension under subsection (6) within which to submit its Indigenisation implementation plan, fails to do so within the extended period, shall be guilty of an offence and liable to a fine not exceeding level twelve or imprisonment for a period not exceeding five years or to both such fine and such imprisonment” Clause 4(b) states that, “A business which, having been served with a notice by the Minister under subsection (2) to submit a provisional Indigenisation implementation plan, fails to do so within thirty days of receiving the notice, shall be guilty of an offence and liable to a fine not exceeding level twelve or imprisonment for a period not exceeding five years or to both such fine and such imprisonment” Clause 5(b) states that, “Any investor who, after the date of commencement of the Indigenisation and Economic Empowerment (Amendment) Regulations, 2011 (No.3), makes an investment in a business belonging to any the sectors prescribed under the third schedule which results in the investor owning or having a controlling interest in that business shall, unless he or she has obtained for the investment the prior written approval of the Minister and the Minister responsible for administration of the Zimbabwe Investment Authority Act[Chapter 14:30] , shall be guilty of an offence and liable to a fine not exceeding level twelve or imprisonment for a period not exceeding five years or to both such fine and such imprisonment” Clause 8 states that, “If after valuation conducted by the Minister in terms of subsection 1 a business is found to have substantially (to the extent of ten per centum or more) undervalued its net asset value, it shall be guilty of an offence and liable to a fine not exceeding level twelve or imprisonment for a period not exceeding five years or to both such fine and such imprisonment” All the offences created by the regulations are punishable by either a level 12 fine or a prison term of up to five years. No consideration of the nature and quality of the offence is made. Although this penalty is permissible under section 21 of the parent Act, it is permissible as the maximum punishment applicable. It should not be taken as a one-size-fits-all prescription. Regard must be had to the nature and quality of the offence. 1 \Note by Veritas. The receipt of the report was announced to the House of Assembly by the Acting Speaker on 1st May 2011. It is the view of the committee that the above penalties are disproportionate to the offences committed. The law in Zimbabwe regards penalties that are disproportionate to the offence as unconstitutional. Chidyausiku C.J, in the case of Bennett v Mnangagwa NO & Ors, 2006 (1) ZLR 218 (S) clarified this position in the following terms: “I respectfully agree with the view that a punishment that is grossly disproportionate to the transgression constitutes a violation of s15 (1) of the constitution, that is to say inhuman and degrading… As long as the penalty is grossly disproportionate to the offence, it is prohibited by section 15 (1) of the constitution”. In the case of S v Ndhlovu 1987 (2) ZLR 246 (S) Gubbay JA (as he then was) endorsed this line of reasoning when he quoted with approval the American case of Weemes v United States 217 US 349 at 367. This case lays down unequivocally that, under the protection afforded the individual by the eighth amendment to the American constitution, any punishment imposed upon a person by the state must be graduated and proportionate to the crime he has committed. His constitutional right would have been infringed if, having regard to the nature and quality of the offence committed, the sentence is so unfit as to be grossly disproportionate. Thus the effect of the punishment imposed by the state must not be grossly disproportionate to what would have been appropriate. The same clause seeks to impose prison sentences on businesses, which is absurd, as a prison term can only be imposed on a natural person. “Business” is defined in section 2 of the principal Act as Any company, association, syndicate or partnership of persons that has for its object the acquisition of gain by the company, association, syndicate or partnership, or by the individual members thereof, whether the business is registered in terms of the Companies Act [Chapter 24:03] or otherwise. In this case a prison term will only apply to those forms of business without a corporate veil such as sole traders. It is absurd that a company whose members are protected by a corporate veil could be sent to jail for violating the Statutory instrument. It is also unreasonable that only businesses with no corporate veil are sent to jail while other forms of business are punished more leniently by fines, since it is impossible to imprison them. It is the view of the Committee that this Statutory Instrument is ultra vires the enabling Act because, in enacting the parent Act, that is, the Indigenization and Economic Empowerment Act, Parliament never intended such an absurd and unreasonable occurrence. It is also the view of the Committee that any provision that is absurd and unreasonable does not afford an accused person protection of the law. Such a provision violates section 18 (1) of the Constitution, which provides that: Subject to the provisions of this Constitution, every person is entitled to the protection of the law. Once the law is absurd and unreasonable, especially penal law, it fails to protect persons. Instead of protecting citizens, the law now oppresses them, contrary the to the spirit of the Bill of Rights. Therefore, the finding of the Committee is that this Statutory Instrument is both unconstitutional and ultra vires the enabling Act on the following grounds It imposes hefty penalties that are grossly disproportionate with the offences committed, thereby being inhuman and degrading, and thus violating section 15 of the Constitution of Zimbabwe. By imposing prison terms on businesses, It is unreasonable and absurd, thereby violating section 18 of the constitution which provides for the right to the protection of the law. Hon S.L. Mushonga Chairperson Parliamentary Legal Committee