PRESENTATION OF THE PROPOSED SECURITY INDUSTRY REGULATION BILL, 2001

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• PRESENTATION OF THE PROPOSED SECURITY INDUSTRY
  REGULATION BILL, 2001
• by
• Francois Slabbert
• Manager Legislation and Policy Development
• 02 May 2001

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INTRODUCTORY OBSERVATION

• To our understanding certain operations,
  operational divisions and personnel of Telkom are
  required to comply with specific provisions of
  the Bill, which in terms of its objects is meant
  to apply to the private security, private
  investigations and related industries only.

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BUSINESS UNITS POTENTIALLY EFFECTED BY THE BILL

• The following in-house operational units,
  functionaries and support personnel of Telkom
  are potentially effected by the Bill
• its in-house security and investigations section,
• its market research section,
• its market intelligence section,
• its mergers and acquisitions section,

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• its credit control section,
• its collections division,
• its personnel division,
• its risk management section, and
• its information technology (IT) security
  division.

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ADDITIONAL REGULATIONS FOR REGULATED INDUSTRIES

• The aforementioned functional units,
  functionaries and support personnel will fall
  under the jurisdiction of and be regulated or
  prescribed to by inter alia

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• the Security Industries Regulations Act
• regulations promulgated pursuant thereto
• the Minister of Safety and Security
• the Security Industry Regulatory Authority
• the Security Officers Board and
• the code of conduct for security service
  providers.

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REGISTRATION AS SECURITY SERVICE PROVIDER

• Telkom and other non-security entities might
  arguably be obliged either to
• register as security service provider with the
  Security Industry Regulatory Authority, or
• if unable to comply with the qualifying
  registration criteria or a failure to obtain
  exemption from the Minister close down its
  business investigations, intelligence and
  associated activities.

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OBJECT OF THE BILL

• The sole stated purpose of the Bill is "To
  provide for the regulation of the security
  industry for that purpose to establish a
  regulatory authority and to provide for mattes
  connected therewith".

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MOTIVATION FOR THE EXCLUSION OF NON-SECURITY
INDUSTRIES FROM THE APPLICATION OF THE BILL

• Telkom submits that as a public company -duly
  incorporated in terms of the Companies Act of
  1973 with as its principle object the rendering
  telecommunications services- it should be
  exonerated in all of its capacities from
  compliance with any of the provisions of the
  Bill.

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• It is submitted that only those persons or
  entities that have as their principal business
  objective the rendition of security or associated
  services do in fact belong to the security
  industry or constitutes a security business
  within the meaning of the object of the Bill.

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PROVISIONS THAT MAY IMPACT ON TELKOM'S
OPERATIONAL AND BUSINESS INTERESTS

• The definitions and other provisions hereafter
  listed probably has the cumulative effect of
  making the Security Industry Regulation Bill
  applicable on Telkom's management, employees,
  activities, operations, business associations and
  activities to a greater or lesser extent the
  relevant provisions being

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• the definition of "code of conduct"
• the definition of "private Investigator"
• the definition of "security equipment"
• the definition of "security industry"
• the definition of "security officer"
• the definition of "security service"
• the definition of "security service provider"

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• the definition of "the Act"
• section 2 of the Bill
• section 20 of the Bill, and
• section 28 of the Bill
• These provisions, are potentially onerous,
  disruptive, and harmful to Telkom's business and
  operational interests, and will more fully be
  dealt with hereafter.

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The Implicit Distinction between "Security
Service Provider" and "Security Business"

• Persons " using their employees to protect
  or safeguard merely their own property and
  other interests, or persons or property on the
  premises or under the control of such person "
  are excluded from the definition of "security
  business" but apparently not from the definition
  of "security service" or of "security service
  provider".

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• Although the insertion of the phrase "for
  remuneration or reward" in relation to "security
  service provider" may have the effect of
  excluding Telkom in certain instances, it does
  not have a similar effect on its security
  investigations and intelligence personnel.

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• The obligation to register with the Security
  Industries Authority and compliance with the
  industry code, for instance, will apparently
  apply to Telkom equally if is binding on members
  of its staff.

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The Definition of "Private Investigator"

• The definition in the Bill of "private
  investigator" includes most of the activities
  normally performed by Telkom's security and
  investigations, IT security, business
  intelligence and many other sections also. This
  definition contained in section 1 of the Bill
  effectively transforms Telkom into a private
  investigator with all the attendant obligations
  of the Bill being imposed and binding on it.

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The Definitions of "Security Officer", "Security
Service" and "Security Industry"

• A "security officer" is defined as someone who is
  employed by another and performs for remuneration
  one or more security services. The definition
  includes many of Telkom's employees who render
  "security services" aimed at protecting company
  property, particularly in the form of incorporeal
  property such as business interests, but also the
  installation and servicing of "security
  equipment" and the monitoring of signals or
  transmissions from electronic security equipment.
  We have already noted that in terms of the Bill
  these personnel, as well as their supervisors and
  managers are all regarded as security service
  providers in their own right and therefore
  subject to all the provisions of the Bill
  relating to security service providers.

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CONCLUSIONS

• Whilst it has undoubtedly become imperative for
  the security and private investigation services
  industries to be regulated, the introduction of
  measures aimed at achieving that end should be
  contained within the confines of its original
  objectives and to the security industry in
  particular.

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• Within the modern competitive business
  environment the services of efficient
  investigations, security and intelligence
  functionaries within commercial companies have
  become more than just a convenience. Businesses
  have come to rely on these functions to formulate
  policies and strategies on which continued
  competitiveness and profitability, and even its
  very existence depends.

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• In that sense and in that environment it is
  extremely undesirable for either the operations
  themselves or for the staff performing those
  functions to be subject to undue regulation,
  disruption, scrutiny or interrogation. Because
  market forces and market movements are so
  volatile, timing is often vital to the effect and
  worth of the performance of an act or of the
  conclusion of a transaction or listing so that
  and any untimely interference or stoppage could
  amount to an effective derailment.

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RECOMMENDATIONS

• In view of the aforementioned considerations it
  is submitted that, notwithstanding any contrary
  provision or interpretation of the Bill, all
  in-house security, investigations and
  intelligence functions performed by commercial
  companies -that do not have as their principal
  business the provision of security or private
  investigation services to third parties- be
  expressly excluded from the application of the
  Bill.

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• It is further submitted that the definition of
  "private investigator" in section 1 of the Bill
  be amended by the insertion of the following
  words at the end of the section "but shall
  exclude any business intelligence operations
  which a company may undertake in the course and
  scope of its normal and reasonable endeavours to
  safeguard its security, strategic, operational,
  and business interests and that of its holding
  company or subsidiaries."

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• Thank you!