Analysis of the PVO Amendment Bill: Bill Watch 74/2021

Introduction

In Bill Watch 72/2021 of the 12th November we reported that the Private Voluntary Organisations Amendment Bill had been published, and we outlined the Act which it intends to amend, namely the Private Voluntary Organisations Act. In this Bill Watch we shall analyse the Bill itself. Before doing so, we should note that the International Center for Not-for-Profit Law has published a helpful commentary on the Bill, which can be accessed on the Veritas website .

The Purpose of the Bill

According to its memorandum, the Bill has three purposes:

  • To comply with recommendations made by the Financial Action Task Force (FATF),
  • To streamline administrative procedures and allow for the efficient regulation and administration of PVOs, and
  • To prevent PVOs from undertaking political lobbying [This purpose is mentioned in the memorandum almost as an afterthought, but it may be the principal objective of the Bill].

 

The first of these purposes, compliance with FATF recommendations, needs some explanation.

The FATF Recommendations

FATF is an inter-governmental organisation set up in 1989 to act as a global watchdog against money laundering and terrorist financing. It has set international standards, known as the FATF Recommendations or FATF Standards, to prevent these illegal activities. The standards ensure a co-ordinated global response to prevent organised crime, corruption and terrorism, and to help authorities identify and recover the proceeds of cross-border crimes such as drug dealing and human trafficking. The latest version of the Standards can be accessed on the Veritas website .

A regional body called the Eastern and Southern Africa Anti-Money Laundering Group (ESAAMLG), set up to monitor compliance with the FATF recommendations, found that Zimbabwe was only partially compliant with FATF recommendation 8 which, in summary, says that countries should apply focused and proportionate measures to protect vulnerable non-profit organisations against being used as cover for the financing of terrorist activities.

The Incoherence of the Bill

Any analysis of the Bill is made difficult by its incoherence, which at times descends almost to gibberish. Take for example this attempt to define “material change”:

“material change” in relation to the amendment of the particulars of the original application for registration means—

(a) any change in the constitution governing the private voluntary organisation concerned happens upon the termination for any reason of the private voluntary organisation with respect to the disposal of its assets on the date of its termination”. What that is supposed to mean is anyone’s guess.

We turn now to look at what, so far as we can gather, are the important amendments which the Bill will make to the Act.

Extending the Scope of the Act

Clause 2 of the Bill will extend the application of the Act to cover persons, legal arrangements, bodies, associations or institutions which the Minister declares in regulations to be vulnerable to misuse by terrorist organisations, or at high risk of being misused by terrorist organisations. The persons, legal arrangements, bodies etc covered by a Ministerial declaration will have to register as PVOs under the Act and will be subject not only to the requirements and obligation laid down in the Act but also to any additional requirements the Minister may specify in regulations.

Is this constitutional?

No, it violates the Constitution in at least two respects:

  • The Minister is not obliged to give notice to the persons, legal arrangements, etc. before declaring them to be vulnerable to terrorist misuse, nor will he or she have to invite them to make representations before making the declaration. This violates the principles of due process and, more specifically, infringes section 68 of the Constitution which guarantees everyone the right to administrative conduct that is procedurally fair.
  • A declaration by the Minister will extend the Act to cover institutions that are not currently within its ambit, and will impose additional controls over them that are not currently laid down in the Act. A declaration will therefore constitute a major amendment of the Act, which the Minister will make by regulations. It will amount to usurping Parliament’s primary law-making power which, in terms of section 134 of the Constitution, cannot be delegated to a Minister.

 

Prohibition Against Fund-raising by Trusts

Clause 2 of the Bill also contains a provision permitting the Registrar (i.e. the Director of Social Welfare) to prohibit trusts that are registered with the High Court, but are not registered PVOs, from collecting contributions from the public or from outside Zimbabwe for any of the purposes specified in the definition of “private voluntary organisation” (i.e. charitable purposes, social welfare assistance, legal aid and animal welfare). The Registrar will send a notice to the trustees of such a trust compelling them either to sign a sworn declaration that they will not collect contributions for those purposes, or else to register their trust as a PVO. Trustees will be able to avoid doing so only if they can persuade the Registrar that the notice was made in error. It is not clear what the purpose of this provision is, and the Bill’s memorandum gives no answer.

Is this constitutional?

Probably not. As we explained in our earlier Bulletin (Bill Watch 72/2021), freedom of association is guaranteed by section 58 of the Constitution and can be limited only by a law that is fair, reasonable, justifiable and necessary in an open democratic society (section 86 of the Constitution). A democratic society cannot exist without freedom of association, so limitations on it must be as few and as light as possible [we shall return to this theme later]. In the absence of a stated reason for prohibiting trusts from raising funds – and in any legal challenge to the prohibition the onus would be on the government to justify it – the prohibition seems irrational and excessive, going beyond the limitations permitted by the Constitution.

Prohibition Against Political Lobbying

Clause 5 of the Bill will insert a provision into the Act permitting the PVO Board to cancel the registration of a PVO if it engages in political activities. Unfortunately – and here we come up against the Bill’s incoherence again – it is almost impossible to discern what political activities will trigger cancellation. If the provision is construed at its widest, it would permit cancellation if a PVO:

  • Supports or opposes a political party or candidate in an election, or
  • Is a party to a breach of section 7 of the Political Parties (Finance) Act, which prohibits foreigners domiciled outside Zimbabwe from soliciting donations from the public within Zimbabwe on behalf of a political party or candidate.

 

Is this constitutional, assuming we have construed it correctly?

No. Freedom of association under section 58 of the Constitution extends to associating for political purposes, and this is reinforced by section 67 which says that every Zimbabwean citizen has the right to form, join and participate in the activities of political organisations. So if an association wants to support or oppose a particular political party or candidate it should be allowed to do so, particularly if its members are Zimbabwean citizens. Registered PVOs may need some restrictions, to prevent funds donated for charitable purposes being diverted to politicians and their parties, but otherwise they must be free to engage in legitimate political activities which fall within the objectives for which the organisations were established. It is quite conceivable, for example, that PVOs established to protect the environment might want to express support for a political party campaigning for measures to alleviate the effects of climate change. They should be permitted to do this – indeed they have a right to do it.

As to a PVO breaching section 7 of the Political Parties (Finance) Act, it is hard to see how a registered PVO could possibly do this. But assuming it could, it should be prosecuted under that Act rather than under the PVO Act.

Suspension of Executive Committee of PVO

Clause 7 of the Bill will replace section 21 of the Act which, as we noted in Bill Watch 72/2021, was declared unconstitutional by the Supreme Court on the ground that it does not afford PVOs an opportunity to be heard before the Minister suspends their committees [which in many PVOs are called “boards”].

The new section rectifies that, at least in part, by requiring the Minister to get an order from the High Court before committee or board members can be suspended. Under the new section, the Minister can make an application to the High Court for an order suspending the committee of a PVO and appointing a trustee to manage its affairs, if it appears to the Minister that:

  • The PVO has ceased to operate in furtherance of its objectives,
  • Maladministration is adversely affecting the PVO’s activities,
  • The PVO is involved in illegal activities, or
  • It is necessary or desirable in the public interest to suspend the committee.

 

The new section is still unconstitutional however, because pending the issue of a court order, the Minister can appoint a temporary trustee to run the PVO’s affairs, and the Minister can do this without inviting representations from the PVO concerned. And as in the existing section, committee members who have been suspended for more than 30 days will cease to hold office and be disqualified from standing for re-election.

If a trustee finds that committee members have misappropriated the PVO’s funds or assets, he or she will be able to make an affidavit setting out his or her findings and apply to the High Court for an order directing them to restore the funds or assets by a specified date. If the court grants the order and the committee members do not comply with it, the trustee will:

“submit the order for registration to whichever court would have had jurisdiction to make such an order had the matter been determined by it, and thereupon the order shall have effect, for purposes of enforcement, of a judgment of the appropriate court”.

Problems with the new section

The new section suffers from the same incoherence that plagues much of the Bill. Although it begins by requiring the Minister to apply to the High Court for an order suspending committee members, later on (in subsection (5)) it seems to imply that the Minister can suspend them before applying for an order.

The provision for a trustee to register an order calling on committee members to restore funds or assets does not make sense. The order which the trustee will register is itself an order of the High Court, a court with plenary jurisdiction throughout Zimbabwe, so why on earth should it be registered with some other court in order to be enforced?

Is the new section constitutional?

Not entirely, though it is better than the existing section:

  • One of the grounds on which the Minister can apply for the suspension of committee members, that “it is necessary or desirable … in the public interest”, is excessively wide in the light of the constitutional protection of freedom of association. It means that members can be suspended even if they have not been guilty of maladministration and have not been involved in illegal activities. What other legitimate grounds for suspension can there be?
  • The Minister’s power to appoint a provisional trustee without affording the PVO concerned a hearing breaches the rules of due process enshrined in section 68 of the Constitution.

 

Assessment of Risk for Purposes of FATF Standards

Clause 8 of the Bill will insert a new section 22 into the Act requiring the Minister, at least once every five years and with the co-operation of the Reserve Bank’s Financial Intelligence Unit, to assess the vulnerability of PVOs and other similar organisations to being used for terrorist financing. On the basis of this assessment the Minister will be able, so it seems (that incoherence again!), to do one of two things:

  • To require any PVO or organisation to take specified measures to mitigate their vulnerability, or
  • To make regulations prescribing special measures to be taken by “designated” PVOs and organisations [we have put the word “designated” in inverted commas because there is no indication of how PVOs and organisations are to be designated].

 

Designated PVOs and organisations will have 14 days in which to contest their designation on the ground that it was made in error, or that the measures they are required to take are unreasonable or disproportionate. If a designated PVO or organisation fails to register as a PVO under the Act, it and its office-bearers will be guilty of a criminal offence and liable to a fine of level 14 (currently Z$500 000) or ten years’ imprisonment or both. In addition the Minister will be able to get the Registrar to revoke or suspend the organisation’s licence or registration and order the removal of its office-bearers. PVOs and other organisations aggrieved by the Minister’s decisions under the new section will have a right to appeal to the High Court, BUT only on procedural grounds.

Problems with the new section

There are several problems with the new section 22:

  • The assessment of PVOs’ vulnerability will be done by the Minister and a unit of the Reserve Bank. The PVO Board will not be involved, and individual PVOs will have no say in the matter. This is contrary to what FATF itself says, that countries should work with PVOs and civil society organisations during the risk assessment process.
  • It is does not state how PVOs and other institutions are to be “designated” or who is to designate them.
  • The penalty for failing to register as a PVO is grossly excessive, completely disproportionate to the offence, and it is not clear how the new offence relates to the offence under section 6(3a) of the Act, which is essentially the same and for which the penalty is much lower.
  • There will be no effective appeal against the Minister’s decisions under the new section.

 

Is the new section constitutional?

Some aspects of the new section are certainly unconstitutional:

  • The lack of involvement of PVOs in the assessment of their vulnerability infringes the rules of natural justice enshrined in section 68 of the Constitution, one of the most important of which is the right to have a voice in decisions that affect one’s interests.
  • The penalty for failing to register as a PVO is disproportionate to the offence, as we have said, and therefore constitutes cruel or degrading punishment for the purposes of section 53 of the Constitution.

 

Civil Penalties

Clauses 9 and 11 of the Bill insert a new Schedule providing for the imposition of civil penalties for certain contraventions of the Act, namely:

  • A PVO failing to apply for the amendment of its registration after there has been a material change [see above for the lack of clarity of this phrase] in its original particulars of registration (the new section 13A(2))
  • A PVO transferring its certificate of registration to another PVO without permission from the Registrar (section 13A(5)).

 

In the event of such a contravention, the Registrar or a designated member of his or her staff will be entitled to serve a civil penalty order on the offending PVO and any or all of its office-bearers, obliging them jointly and severally to pay a civil penalty of up to Z$10 000 unless they can show that:

  • The civil penalty order was issued in error, or
  • The contravention was not wilful, or
  • The contravention was beyond the control of the PVO or its officers.

 

Failure to pay a civil penalty within 90 days of its issue will be a criminal offence for which the PVO concerned and “every one of its officers” will be liable to a fine of leve,l six (currently Z$30 000) or one year’s imprisonment or both.

Are these provisions constitutional?

Several of our statutes provide for civil penalties. Their constitutionality has not yet been tested in court, though it is open to doubt – particularly in this case, because:

  • There is no provision for the imposition of a civil penalty and its amount to be confirmed by a court; hence the penalty may be imposed arbitrarily and its amount fixed without proper regard to all the circumstances.
  • No appeal is allowed against a civil penalty order, except to the person who imposed it and on the limited grounds we mentioned above.
  • All the officers of a defaulting PVO can be rendered liable to pay a civil penalty, regardless of their individual fault. They are also all criminally liable if the penalty is not paid.
  • A civil penalty can be imposed even if the defaulting PVO and its officers have been prosecuted criminally for the default, and even if they have been acquitted of the criminal offence. There is therefore double jeopardy. [It should be pointed out however that although the new Schedule which the clause will insert in the Act expressly provides for such double jeopardy, it could never happen in practice because the defaults for which the Schedule allows civil penalties to be imposed are not in fact criminal offences – yet another example of the Bill’s incoherence].

 

Evaluation of the Bill

Overall, the Bill is badly conceived and badly put together. In Bill Watch 72/2021 we pointed out that the PVO Act is unconstitutional in several respects, and this Bill will only add to its unconstitutionality. Perhaps the most dangerous aspect of the Bill is its vagueness. Its provisions are not clearly drafted and while this frequently results in incoherence, as we have noted, it will also encourage government officials to place an unduly repressive interpretation on the Bill’s vague and broadly drawn provisions. Clause 5 of the Bill is the prime example of this: it seems to prohibit PVOs from supporting or opposing political parties or candidates in an election, but it is not entirely clear that it does so nor, if it does, what sort of support or opposition is prohibited. If the clause is enacted the Government will almost certainly use it to prevent PVOs from expressing any form of support for any political party; perhaps they will use it to prevent PVOs from supporting particular policies put forward by a political party; perhaps even to prevent them from engaging in civic education or election observation or similar activities. Whatever interpretation is put on the clause, it could certainly be abused.

Almost 200 years ago a perceptive Frenchman, Alexis de Tocqueville, wrote a book Democracy in America following a visit to the United States. One of the features of American democracy that particularly struck him was the way Americans set up societies and associations to accomplish an enormous variety of things: establishing schools, universities, hospitals and prisons, building churches, sending missionaries abroad – all these were done through societies. He considered these societies vital to democracy and to social progress: societies were the cradle of democratic self-reliance because even non-political ones fostered the skills of government. Societies were also vital to economic development. Americans did not wait for their government to provide them with services and development; they formed societies and did it themselves. As a result the United States became the economic giant it is today.

We in this country could emulate the success of the United States within our African sphere, if only we encourage societies – PVOs – of all kinds to multiply and do their work. If we try to limit their activities and subject them to stultifying government control, we shall stifle not only democracy but also our economic development. That is what this Bill, if enacted, will do.

Source: Veritas

 

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