Thursday, 31 March 2011

Be Aware – South African Government Invasions of Privacy

Today’s Questions for South Africa
Be Aware – South African Government Invasions of Privacy
A recent radio discussion covered the development of technology in modern society, and its advantages and dangers.  One of the sceptics, a university Professor, stated that he believed that technology must continue to progress, but warned that users of technology should take the trouble to be aware of the dangers it posed.  As an example, he warned that the use of the internet is tracked by search engines, providing a, sometimes, very comprehensive record of your purchases and interests.  A program is available that takes your name and searches the social networking sites for it, recovering photographs with that name attached to them.  When these elements are put together, it is possible for a person or body who is interested in you to build a complete record of you and your activities.  The Professor asked the question: “Are we aware of the risks as well as the benefits of the technological developments that are becoming increasingly part of our everyday lives?”  He advocated that the Government should take steps to ensure that its citizens are protected against the threats posed by the technology.
What the learned Professor overlooks is that, in many cases, the Government creates the threats.  There are many aspects of Government and legislation that are overlooked, and a cynic may well be advised to question whether it is desirable that Governments be given the responsibility to ‘look after’ us in this regard.  Let us look at a few examples of real situations where Government has proven it is not trustworthy.
Legislation exists that makes it compulsory for a ‘financial adviser’ to report discussions with a client in which mention is made of a desire to reduce the client’s tax burden.  This legislation does not require that the desire be to utilise unlawful means.  It is not even necessary for the discussion to result in action being taken.  This has the effect that it is no longer possible for a legitimate taxpayer in South Africa to hold a discussion with a qualified professional with the objective of achieving a lawful and legitimate objective without the discussion being reported to the ‘authorities’!  Such reporting can only have as its objective the placing of the unwitting citizen on a ‘watch list’ or even becoming the subject of an active investigation into his financial affairs.
A client managed a mine on behalf of foreign investors who had invested substantial funds to bring the mine into operation and to develop a new technology for the optimal treatment of the mineral.  During a discussion with some senior officials of the Department of Mines, the client was asked what the company’s intentions were regarding the inclusion of ‘previously disadvantaged’ shareholders in the mining company.  His response was that several discussions had been held with various potential candidates, but no result had been achieved as the candidates were universally seeking a donation of the shareholding, required substantial salaries without doing anything for them, and could add nothing regarding management skills, technology, marketing or any other aspect that would make them desirable participants in the business.  The Department officials suggested strongly that active steps be taken to introduce shareholders ‘acceptable to the Government’ into the company, regardless of their ability to add any value to the business.  The client was shown a list of five names that were stated to be ‘acceptable Black shareholders’.  The client then asked what would happen if he did not agree to hand over a substantial share of the company for no consideration.  He was told that “We will tax you out of existence!”
A short time later, the company was visited by two officials of the South African Revenue Services (SARS), who demanded to inspect the books of the company.  All accounting information was provided and all questions answered as fully as possible.  Neither the company nor any of its shareholders or officials had ever had any conflict or dispute with SARS previously.  After about two hours, the officials stated that they were satisfied, and left.  About three weeks later, a notice was received from SARS demanding payment of ‘arrear VAT and penalties’ amounting to over R21 000 000.
Legal advice was sought from the firm’s attorney and Senior Counsel, and it transpired that the actions of the company had been faultless.  Although SARS claimed that VAT was due on export sales, no VAT was, in fact, payable on such exports.  The legal advisers mentioned that SARS habitually made such unlawful demands, and many companies were ‘blackmailed’ into making settlements to SARS to avoid the protracted disputes, involving the locking up of large sums and the dedication of considerable senior management time to resolving the dispute.  The client’s company had several foreign shareholders, including a number of Germans, who instructed the client to do whatever was necessary to comply exactly with the law, including, if necessary, paying the full amount actually due or fighting the case to a lawful conclusion.  Notice was therefore issued to SARS object ting to the demand.
After a few weeks, without any form of notification to the company either by SARS or the company’s banks, cheques issued by the company were returned unpaid.  On enquiry, the company was informed that the South African Reserve Bank had frozen the company’s bank accounts, as well as the bank accounts of all other companies which had some of the same Directors.  When approached for reasons for this action, the Reserve Bank refused to provide any information, but a private conversation with a Reserve Bank official disclosed that the action had been taken to ‘support the demand by SARS’.  An urgent legal action was launched to require the Reserve Bank to lift the freeze.  This action was complicated because the Reserve Bank referred in its response to its Regulations, which were not publicly available.  This complication was resolved when a friend of the client was able to obtain a photocopy of the Regulations from a family member who worked in a bank.  One day before the Court hearing of the urgent action, the Reserve Bank’s representatives legal representatives agreed, in a meeting with the company’s legal representative, to lift the freeze if the company agreed to pay its own legal costs.  When asked what the alternative would be, the Reserve Bank stated that it would use every delaying tactic available to prevent resolution of the matter for as long as possible!  Confronted with this situation, the company agreed to a consent order lifting the freeze on its bank accounts and paying its own costs.
Within a couple of days, an order was presented to the company’s attorney appointing that firm as collection agent for SARS.  The effect of this was that any payment made to the attorney of any nature whatsoever by or on behalf of the company was to be paid over immediately to SARS in settlement of the demand by SARS against the company.  The effect of this was that the company would be unable to pay its legal costs, and was so, effectively, deprived of legal representation.  When the foreign shareholders were notified of this, one of them was so incensed that he established a fund with the attorney to cover all legal costs, which, at this stage, were running into millions of Rands.  SARS then demanded of the attorney that he hand over all records of dealings with the company, including documents and records of discussions relating to the present case.  The attorney refused to do so, as these records were protected by law.  He was then informed by SARS that a VAT investigation would be opened against him, which would entitle SARS to inspect these records.  His response to this threat was to inform SARS that any attempt by SARS to obtain access to his confidential records in this way would attract an immediate Supreme Court action for an interdict against SARS to prevent it acting in such a way. 
The Court action against SARS was successful, and SARS withdrew the demand for the ‘arrear VAT and penalties, but a new demand for a lesser amount was served immediately after the withdrawal.  This was successfully contested, but a further reduced demand was served by SARS, which was also successfully contested.  This happened twice more, before a final demand for R8 000p was paid by the company, in respect of an illegitimate demand by SARS, in the interests of obtaining release of the very large sum of VAT refund to which the company was entitled and which was being withheld by SARS until the series of SARS demands was settled.  SARS applies a principle that any demand by SARS must be paid in full before an objection may be heard.
Only a few weeks after the ‘end’ of this affair, the Department of Mines served a notice that the mining licence of the company had been terminated, demanding an immediate cessation of mining activities.  This demand was also contested in the High Court on the basis that the Department had no right to terminate the mining licence, as no breach of it had occurred.  This action was also successful.
As a result of this long series of illegal actions by the Government, and abuse by several organs of Government of the powers granted to it by a series of statutes, the shareholders in the mining company withdrew all investments made by them in South Africa, amounting to some US$154 000 000 and creating over 300 sustainable jobs, most being in the production of goods or services for export.  They have publicly declared that they would not ever consider making any further investment in South Africa, and have advised their numerous business associates not to invest in the country.
In each of these activities by Government, it was clear that the protection of the rights of its citizens was not a consideration for Government.  Information that was confidential to the citizens was used by Government officials in a manner that was both illegal and contrary to the interests of the country as a whole.
Other reasons for citizens to be concerned about putting large amounts of confidential information in the hands of Government is the notorious inability of Government employees to understand the need for maintenance of security of such information.  Two examples spring immediately to mind.
In the 1970s, when South Africa was at war, an associate parked his car near the Military Headquarters in Pretoria.  Walking down the street, he noticed that about eight palettes of paper were standing on the sidewalk, with many documents, particularly computer printouts, spilling onto the sidewalk.  Unable to constrain his curiosity, he looked at what these papers might be.  To his amazement, they were listings of equipment, details of men with their units, locations, and home addresses, with an evaluation of their preparedness for action!  He walked to the entrance of the building, intending to bring this breach of security to the attention of a senior officer.  The security was impressive, and he was unable to talk to anyone as he did not have an appointment.  He read about the situation in a newspaper several days later.  These highly confidential documents had been openly displayed on a public sidewalk for at least several days!
In another example, when the ‘new’ identity documents were issued, my partner and I applied for ours.  After several months, the document had not yet arrived, so I telephoned the Department of Home Affairs, and was informed that the documents were at the local Post Office.  On Saturday morning, we went to the Post Office, and were led into a room in which were seven long boxes with envelopes containing Identity Documents.  We were requested to find our documents, and the Post Office official left the room.  We were left there unattended.  To this point, we had not been asked to prove our identity in any way.  We leafed through the several hundred documents contained in the boxes, and found ours.  Leaving the room, we walked down the short passage to the Post Boxes, and went to the counter where we had initially reported, where we waited several minutes for an official to notice us.  We told her that we had found our Identity Documents, she turned to serve another customer, and we left, taking our documents with us.  There was no security of any form over the Identity Documents, and we could easily have removed several dozen unnoticed.
With the proliferation of information collections around the world, it is entirely reasonable for any citizen to be concerned about what will happen to information collected in any way.  Governments eavesdrop on telephone calls, with automated equipment scanning millions of conversations for key words.  When these are picked up, the conversation is recorded.  Do you know what the key words are?  Certainly they cover words related to terrorism and crime, and probably cover tax, foreign exchange transactions and money transfers.  What else do they cover?  Many perfectly innocent conversations include these key words.  Does this mean that every person uttering the words ‘bomb’, ‘explosive’, ‘Dollars’ and others of similar suspicious nature automatically become the subject of a surveillance program?  Is it necessary to force attorneys, accountants and financial advisers to become State snitches, as in the old East Germany? 
With the spread of use of face recognition software and the ubiquitous placement of surveillance cameras, under the umbrella of ‘protection of the public’, we are all subject to an almost minute-by-minute recording of our activities.  The introduction of automated road toll collection systems, using chips or licence plate reading technology, is an expansion of this surveillance capability.  The recording of flights and trans-border travel on computers ensures that the information is available for ever.  The ability of cellphones to record our position at all times that they are switched on is another invasion of our privacy.  With the recent enforced registration of the name, identity and address of each cellphone user, it is now simplicity itself for the State to keep a running record of our locations, who we call or are called by, and what is said.  Would you disclose details of every conversation, no matter how innocent, to a trustworthy friend, never mind a faceless burocrat with undisclosed, and probably unknowable, motivations?
To reinforce this concern, we must all be aware that senior officials and politicians are constantly in the Press in an unfavourable light.  The President has been charged with corruption, the Commissioner of Police was jailed for corruption, the current Commissioner of Police is facing an enquiry into the illegitimate signature of a large lease agreement, a Lt. General of Police Crime Intelligence has been arrested on suspicion of murder.  The list goes on.  Would you put unbounded trusty in the honesty and integrity of these people or the governmental bodies they lead?
With the abysmal record of the State in keeping its nose clean, do we have any assurance that this information is not being used against us?
A question that any thinking person must ask is “Who is protecting us against those who claim to be protecting us?”

Monday, 21 March 2011

Questions for South africa - Nuclear Power

Today’s Questions for South Africa
Nuclear Power Stations
One of the most pressing questions today is that of nuclear power stations.
The destruction of the nuclear power plants in Japan raises the question of how safe a nuclear installation can be?  There can be little question that nuclear power presents a variety of problems and questions that need to be answered before a country commits itself to the construction of new nuclear power plants or even the continued operation of existing nuclear power plants.  In the context of South Africa, the Cabinet decision in March 2011 to construct six new nuclear installations, only days after the disaster in Japan, must be questioned.  Some of the questions that need answers are addressed below.
Motivation
Nuclear power is one of the alternatives available for the provision of power to an increasingly power-hungry population.  Others include:
v     coal, which consumes large quantities of the Earth’s limited resources of fossil fuels, resources that could well be used for more valuable and durable purposes.  Oil, coal, natural gas and other similar resources are the primary feedstock for the production of a vast range of plastics, without which our modern civilization would be unable to function.  Look around you.  How many of the things that you use every day are made without the use of plastics?  That’s right!  Practically none!  Do you think it is right and good to burn this valuable resource, and do away with your car, shoes, clothes, cellphone and computer?  These reserves will be exhausted one day, and that day will be much sooner if we continue to consume them at a profligate rate! 
v     Solar energy, of which there are abundant and practically inexhaustible quantities poured down on us every day.  It is clean and leaves no harmful residue, produces no Earth-destroying bye-products.
v     Water power generation, which, unfortunately in South Africa as in many other developing countries, requires resources of water that are scarce, although generally not entirely absent.  This possibility has the valuable possibility of supporting agricultural development as an additional benefit of the construction of dams.
v     Wind power, with which South Africa is richly endowed along long stretches of its coastline and mountain ranges.  This, too, with the exception of a low level of noise generation which affects the immediate vicinity, has no undesirable side effects and bye-products, and is produced by an inexhaustible resource.
v     Wave energy, which remains relatively undeveloped at present, but which offers enormous possibilities, and uses a natural source of renewable energy in abundant supply along South Africa’s long coastline with, apparently, no negative effects and extremely limited environmental impact.
Given the wide range of options available, all of which have been available for a long time, the questions to be asked are Why nuclear?  Why now?
The answer to these might be found in the fact that the Cabinet decision to go nuclear was made only after a visit to France by a high-powered delegation, including a number of members of Parliament and Government of South Africa who have amassed enormous wealth in circumstances that might be deemed questionable, and would certainly benefit from a clear statement of source.  French and German companies were accused some years ago of securing lucrative munitions contracts by paying large bribes to senior politicians and Government officials.  The investigations into these transactions by the German Police were abandoned after the South African Police failed, over a number of years, to provide information.  The same South African Police abandoned the investigation in 2010, alleging that it would take too long to obtain the required information from the German Police!  Are these same companies, or their associates, involved in the provision of the nuclear power stations that the Cabinet now proposes building?  It should be recalled that the decision to place the large munitions contracts with companies that were previously not even short-listed was made after personal visits by the officials concerned to the companies.  Given the questionable past and present associations of several of those now involved, it would certainly be legitimate to ask the question if any party to the nuclear power plant contracts has been paid anything, how much has now been paid, and to whom?
Safety
Government and Escom claim that the Koeberg reactor is safe.  Escom states that it does not have the potential problems that the Japanese reactors, Chernobyl and Three Mile Island had, that South Africa is one of the most geologically safe areas in the world.  It does not suffer earthquakes.  Is that the truth?  There was a major earthquake south of South Africa, measured at 5,0 on the Richter scale, in January 2011, in Ceres, not very far from Koeberg, a 6,3 earthquake occurred in June 1979, followed in September 1979 by a 5,7 earthquake!  That does not seem to be very safe, does it?  The Milnerton Fault runs in a south-easterly direction from about 8km offshore of Koeberg, beneath the Milnerton, Cape Town, area and probably across the central Cape Flats and the north-eastern part of False Bay! 
It is well-recognised that the Japanese have some of the most efficient managers and planners available.  The Western world has long viewed the Japanese model of management with envy.  Yet the Japanese reactors have suffered devastating damage, with a major nuclear disaster still looming.  The proponents argue that the disaster is the result of natural causes that cannot happen in South Africa.  The Japanese knew that these causes were a threat to their nuclear industry, yet, with all of their wealth, planning and management efficiency, the disaster did happen!  The short version of the story is that the Japanese built the reactors to be as safe as they could make them in an earthquake. 
The disaster that destroyed the reactors was not an earthquake directly, but a tsunami that resulted from an earthquake!  Nuclear reactors, because of their need for massive cooling capability, have to be built next to large bodies of water, i.e. next to the sea, and that is where tsunamis occur.  It is quite possible that a large shift in the Earth’s crust occurring in the middle of the Atlantic or even in Patagonia, could unleash a tsunami larger than the one that destroyed the Japanese reactors!  How do you build a nuclear plant to withstand a wall of water forty metres high, travelling at a thousand kilometres an hour?  The short answer – you can’t!
When a nuclear reactor fails catastrophically, as those in Japan, Chernobyl and Three Mile Island did, it has the potential to unleash a cloud of radioactive dust that enters the wind systems of the world, and contaminates very large areas.  The contamination is extremely long-lived.  The Welsh farmers, on the opposite side of Britain from Russia, are still unable to sell the meat produced by the sheep grazing on the contaminated land, a quarter century after the Chernobyl melt-down!  This is absolute evidence of the high level of danger to the entire world posed by the nuclear power industry.  And this danger is not confined to operating nuclear power stations. 
The nuclear industry has not yet found a way to deal safely with the radioactive waste of the plants.  This waste continues to emit heat and to require cooling systems for many years after it is put into storage.  When the cooling systems fail, as they have done in each of the nuclear failures, the result is radioactive contamination.  The risk is not confined to nuclear power plants, but also to their waste dumps, and the risk continues decades after the power station is switched off, decommissioned and even demolished!  A glance at the evidence of the incapability of Escom to ensure its continued capability to produce electricity, its prime responsibility and the reason for its existence, must surely bring into question its capability to continue to keep the nuclear waste safe decades after it has ceased to fulfil any economic purpose!
Any nuclear power station, or any other enterprise, is manned by people.  Not only are these people prone to making errors and failing to foresee problems, but they are there for the money.  We have seen how teachers go on strike immediately before exams, how the Defence Force goes on strike, the Police, the medical profession, and all the other so-called essential workers.  The nuclear workers, at any level, are subject to the same drives and motivations.  What is to stop them going on strike and holding the entire country to ransom?  This threat is not confined to the employees of the nuclear facility.  It includes transport companies delivering goods to the plant, maintenance workers, suppliers of pumps, taxi drivers who transport the plant workers, road maintenance workers, and so on.  The list of people who could use the vulnerability of the plant to any sort of failure for their own benefit is practically endless.  It is highly probable that, some day, these workers will be motivated to use their work stoppage ability to hold their employers to ransom.  The result may well be a nuclear catastrophe!
Economic Benefit
One of the claims made for nuclear power is that it is relatively cheap.  No accurate study proving this has been published by Escom or the Government, and one may be pardoned for doubting the figures supplied for the construction cost and the operating costs.  Very few projects in the New South Africa have been completed at the stated cost, or even at 150% of the stated cost.  Part of the reason for this is that large projects are prime targets for corruption, which explains the plethora of large, often unnecessary, projects promoted by Government.  Another part of the reason for cost overruns is that there is a severe lack of qualified and experienced persons with the required skills in the country.  A third part of the reason is that contractors often have to carry a large, unproductive BBEEE component, as well as having to comply with a multiplicity of unproductive Government requirements and form-filling in order to get the contracts in the first place, which pushes their cost base sky-high while, at the same time, displacing those scarce skills that could do the job effectively.
Part of the economic benefit to be derived from a large project is the industrial activity required to produce the components that go into the project.  Unfortunately, in the case of South Africa, a large part of the cost of these components, and so the industrial activity and the jobs it brings, will go abroad.  For example, the tube manufacturing plant that produced the fuel rods for the Atomic Energy Corporation was sold by the ANC government to China for a knockdown price, of which only an amount sufficient to cover the commission of the (ANC-related) selling agent was ever paid!  The atomic Energy Corporation was effectively disbanded, thereby dispersing the extremely valuable expertise it had built up in the nuclear field at huge cost to the country.  Even that expertise would have had to be put under a microscope before the Cabinet could decide to proceed with the commitment to construct a whole series of nuclear power plants.  Without that expertise, they would have had to rely on the expertise of the company supplying the plant.  Or, perhaps, on the money of that company.  It seems unlikely that even the amount of work and products to be supplied locally during the construction phase of these plants will justify the massive expenditure needed for them.
One of the objections to the other forms of (renewable) power generation is that they are expensive in terms of capital requirement.  Perhaps, from a macro point of view, this is not really valid.  The job creation caused by the local manufacture of the components under licence will likely be substantial, and may lead to a new export industry.  The people newly employed will move up on the income scale, making job space available for those below them.  At the end of this process, many of those presently receiving welfare payments will be able to move into formal employment.  The saving of those welfare payments and the taxes paid by the newly employed are never taken into the calculation but are, without doubt, substantial.  The counter-argument to this is that the people to be employed will not be those receiving welfare.  That is true, but their employment in higher-level jobs will free up at least the same number of lower-level jobs, and this effect will cascade down the ladder of job levels to the lowest.  It will open opportunities for new entrants to the job market, and will assist South African industry to enter new fields of opportunity for exports to replace those exports lost to the ever-increasing cost of South African labour.  We must not forget about the Multiplier Effect of new job creation.  This is the effect created when a new job permits the worker to buy a newspaper each day, a new outfit of clothes, send his or her child to a better school, take a vacation at the coast, or to set up a small business to supply materials, parts or services to the new activity, thereby creating a chain of job creation that has been shown to amount to as much as eight to twelve times the number of jobs directly created.  Present Government efforts seem to be aimed mainly at the ‘poorest of the poor’.  This sector of job creation tends to have the lowest Multiplier Effect.  It is much more effective in economic terms, as well as in total job creation terms, to create a high-technology job than one moving gravel on a road repair site.
Escom aims to increase the supply of power to South Africa by the construction of nuclear power plants.  There is a shortage of electricity in South Africa.  It may be possible to achieve the same effect as the generation of power by a nuclear plant simply by subsidising, to the same capital cost, the purchase of energy saving appliances, plant and equipment by the public.  Many factory owners have found that the cost of power to their plants is almost identical regardless of whether coal, gas, oil or electricity is used.  The small difference in cost may be the factor that induces the choice of a higher polluting source over a low polluting source.  The same logic may be applied to a subsidy in the cost of electricity for the switch-over to more efficient methods of using the power, to make that switch-over economically attractive to the factory owner.  It is likely that such a program could easily reduce the need for at least one of the proposed new power stations.
Alternative Power Generation
Although the capital cost of an array of solar panels equivalent to the capacity of a nuclear power station may be high, if that array is broken down by the number of houses in the country, the cost will not be for the direct account of Escom.  In Germany and elsewhere, there is a program under which private persons install their own solar panels on their homes and factory buildings, and sell the excess power they generate to the central supplier.  A study done in German has revealed that many householders have recovered the capital cost of the installation from the sale of their excess power over a period of as little as four to seven years, depending on their own usage.  That is a good return on investment in any terms, and it could be made better by making it tax-free!  Subsidising the capital cost of this installation, in return for a lower selling price of the electricity produced, together with an agreement with financiers to fund the balance, could make it available as a long-term investment to even poor communities.  This could be the start of the democratisation of electricity production! 
The argument against the use of solar or wind power is that it produces power only when the sun shines or the wind blows.  However, that power can be stored in a variety of ways.  For example, the excess power generated during the sunny or windy times can be used to pump water into high-level storage dams, to generate power in a water-powered system in low-sun or windless times, or it could be used to store heat in the form of molten salt, to provide for steam generation at night.  There are many such systems already available and tested.  They need only to be used.
What do we, the public, need to know?
There are many questions still to be asked, but, possibly, the most important are included in the following list.
v     Why do we need nuclear power?
v     What will the real cost be?
v     What are the alternative sources of power?
v     What is the cost of the alternative sources of power?
v     Why has a decision not been made to apply these alternatives?
v     What methods have been considered and adopted for the conservation of the existing electricity supply?
v     What are the real time lines, and how will they be met?
v     Who is going to benefit from the contracts?  Are those in a position to decide on the provision of the nuclear power stations willing to undertake to refund to the public coffers any profit they may subsequently be found to have made from the process that they have not publicly declared up front?
v     What are the real risks of the project, for the full life of the possible risk?  How will these risks be countered?  What assurances will be offered in this regard?
v     What have we not been told?