On 7 November 2022 the Pretoria High Court ordered the South African government to finalise residency applications by 182 mostly Swiss, German, British, and American investors, within 30 days, and slapped the government with an adverse costs order. I represented the successful applicants. The matter is of public interest, and requires a public discussion.
The Court order is a striking rebuke of a beleaguered Department of Home Affairs who have frustrated foreign direct investment estimated to be over 15 billion Rand. This incompetence, punished by the Courts, is a sign that South Africa is not a safe investment destination for international investors.
In this article I shall set out: the background of the case; the conduct by the South African government; respond to the statement by the Department of Home Affairs after the Court order; and provide solutions for international investors who are interested in the Southern African economy.
The 182 foreign direct investors, from mostly developed western nations, sought direct residence permits for themselves and dependents, in the terms provided for by the Immigration Act, to secure permanent access the investments they intended to make in South Africa. They approached prominent immigration practitioners to facilitate the process, at great expense, and submitted their applications in the manner provided by the law.
The South African government failed to consider and finalise these applications, in some cases, for more than 7 years, without any reasons, leaving the investors with no choice but to approach the Court for relief.
The late Leon Isaacson, of Global Migration, a prominent immigration agency in South Africa, assembled other migration practitioners, and their respective clients, to form a class application for administrative justice, against the South African government in the Courts. I was briefed to lead the application.
The application was filed on 3 May 2021. The South African government failed to file opposing papers in the matter within the period of time provided by the Court rules, which was the beginning of the comedic defence by the government. Instead of filing opposing papers, they sent a letter requesting hard copies of receipts that prove that the applications for residence were made, which was done. The matter was set down on the unopposed roll on 10 December 2021, because the government still had not filed opposing papers seven months after the case was filed.
It got even worse. On the day of the hearing they begged for more time to consider the investors applications. As counsel I took instructions to remove the matter from the roll after assurances were made that the applications would be considered within a reasonable time. we had hoped that they would be so embarrassed that they would finalise the process. They proved us wrong.
The matter had to be set down for hearing on 24 June 2022 because the South African government failed to meet their own undertaking to finalise the applications, after what was now 8 years for some applications, and after a year and two months from when the matter was filed in Court.
At this stage it was accepted by everyone, the government officials included, that the State was beyond being ashamed by rank incompetence. They had no difficulty in requesting written copies of the initial permits. This suggests that they lost them and were essentially beginning the process from scratch.
The investors were forced to shoulder the inordinate costs of printing several boxes of papers, at great expense, and delivering them to Pretoria. The matter was removed from the roll, after the government undertook to pay the wasted costs with taxpayer money, which is an issue that the opposition, and concerned members of the public, is likely to have a problem with. We all hoped that the costs order was sufficient incentive to ensure that there were no more delays. The government proved us wrong again.
The matter was set down on the unopposed roll on 7 November 2022, one and a half years after the case was filed, still no opposing papers, and the applications not considered after almost a decade. A sorry state of affairs. Made even worse by yet another request from the Director General on 25 October 2022 for more time to do his job. I was surprised that they had the courage to even make the request, but discussed it with our client’s nonetheless. The motivation for more time was that they were too busy.
Our clients were having none of it. I was instructed to move for a Court order to have the applications finalised. The Department of Home Affairs, for all its bluster in the media, were a no show in Court. The Court was not impressed. They ordered the government to finalise the applications in 30 days and slapped the State with an appropriate costs order.
The Court order was reported by the media. One would have expected the South African government to apologise to the investors, who they had frustrated, and the taxpayers whose money they wasted. The opposite happened. The South African government insulted the investors claiming that the alleged investment was “propaganda” and attacked the lawyers by saying we “must stop promising the public something that is not going to happen”, and “in applying the immigration law of the country, an impression must not be created that South Africa is accessible to the super rich”.
My record in defending the ZEP holders is well known and is sufficient proof that I provide legal services to all races, nationalities, and economic backgrounds. All the investors were promised administrative justice, which they have finally received from the Court, and is proof that they were not promised something they were not going to receive. To the contrary, they have received everything they sought from the Courts together with a costs order. This is not the first time that the South African government has tried to discourage anyone from taking legal action against them, and is a worrying harbinger to the collapse of the rule of law. The publicmust know that no government should discourage any person from taking legal action. The South African government must be condemned by the legal profession around the World for interfering with legal advice lawyers given in matters against them. That in itself is reason not to invest in South Africa.
The South African government had one year and six months to challenge the allegation that the investors had 15 billion Rand to invest, but failed to file any papers in Court, and relied instead on letters begging for time. There is no evidence that the 182 do not have the money to invest, or that they cannot access the financial services from the developed countries where they came from. Even if the investors had significantly less, which has not been proved, that did not absolve the government from failing to make an administrative decision within a reasonable time. A decade is not a reasonable time. It is no excuse for insulting the Court by not appearing on 7 November 2022, which has exposed the government lawyers to disciplinary action by the Legal Practice Council for failure to appear in Court. It does not explain away the waste of taxpayer money which shall be used to pay the costs.
The tone of the South African government’s press statement suggests that they are angry at being exposed as incompetent in Court. The fact they call the proposed investment an “incitement” is dangerous. It is a threat to be taken very seriously. It speaks to the arrogant mistreatment of bona fide international investors. We have seen this malignant rhetoric before, and capital must take cognisance of it, and make necessary preparations.
In my view, the only message that international investors can take from the conduct by the South African government is that South Africa is closed for business. Potential investors self evidently face incompetence, which can only be cured by expensive litigation against an angry unrepentant government with nothing to offer its own citizens yet alone international investors. Smart money must find better investment destinations. The options are many. Zimbabwe’s endless mineral resources has to be considered. Rwanda is thriving. Ghana is vibrant. Kenya is bright. Nigeria is the biggest economy in Africa. These are but a few exciting destinations were international investors don’t have to sue the government before they get an opportunity to invest.
South Africa, by the hand of its own government, cannot be described as an attractive investment destination, and is far from being the gateway to Africa it was once considered to be.
Simba Chitando is an Advocate of the High Court of South Africa.The article reflects the author’s opinions and not necessarily the views of The Southern African Times.
