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                               Abongile A. Sipondo


   1. Introduction

Apartheid South Africa was shrouded in secrecy and lack of transparency. This
system of government ‘resulted in a secretive and unresponsive culture in public
and private bodies’1. This lack of the culture of transparency and accountability
led to many human rights abuses that left deep scars to scores of South
Africans. The actions of secrecy and confidentiality did not only happen in the
public sphere, but also within private bodies. Companies and other private
bodies shrouded themselves in secrecy and little was known about their internal
decision-making processes.

In 1994, democracy dawned into South Africa. The new government understood
the importance of freedom of information as the ‘oxygen of democracy’ that
gives meaning to participatory democracy. Through the new administration,
South Africa saw masses of information on the covert activities of the
intelligence and security branches of the apartheid government become public.
What came to light was the confirmation of some of the most gruesome human
rights abuses that happened under the pretence of national security in apartheid
South Africa2.

The drafters of the 1996 Constitution of South Africa specifically included a
section in the Constitution that provides for the right to freedom of information.
The Constitution of the Republic of South Africa Act 108 of 1996 makes provision
for the right to access information in section 32. The Constitution provides that
everyone has the right of access to any information held by the state3. It further
provides for the horizontal application of the right to access to information held

  LLM (Columbia University) LLM (UCT) PhD Candidate (UCT). Researcher and Advocacy Manager,
Democratic Governance and Rights Unit, Law Faculty, University of Cape Town
  Preamble, Promotion of Acceess to Information Act 2 of 2000
  Chantal Kisoon, ‘PAIA and Public Participation’, IDASA monograph 157, 68
  Section 32(1)(a) of the Constitution of the Republic of South Africa Act of 1996

by another person to everyone when that information is required for the exercise
or protection of any rights.4

The right to access to information is therefore of fundamental importance. It
gives all citizens the ability and power to speak to leaders, access information
and participate in decisions affecting their lives. Moreover, it creates a culture of
accountability, openness and nurtures South Africa’s democracy.

This paper will provide an analysis of the compliance with access to information
by the private sector as obligated by the Constitution and the Access to
Information legislation. It will further look at the potential benefits that may be
derived if the private sector complies with the access to information laws and
how that compliance may assist with corporate governance.

    2. The Promotion of Access to Information Act 2 of 2000 (PAIA)

Section 32 of the Constitution provides for the enactment of a national
legislation to give effect to the right of access to information as stipulated in that
section. To that effect, the Promotion of Access to Information Act 2 of 2000
(PAIA) was enacted. This Act was approved by Parliament in February 2000 and
went into effect in March 2001. It implements the constitutional right of access
to information and is intended to "foster a culture of transparency and
accountability in public and private bodies by giving effect to the right of access
to information" and "Actively promote a society in which the people of South
Africa have effective access to information to enable them to fully exercise and
protect all of their rights."5

PAIA is different from much of freedom of information laws from other parts of
the world and is groundbreaking in at least two respects. First, it is based on,
and backed up by, a specific constitutional right of access to information,
entrenched in the Bill of Rights6. Second, this right and, as a consequence, the
Act is applicable not only to information in government possession but also to
information held by the private sector.

  Section 32(1)(b) of the Constitution
  Preamble, Promotion of Access to Information Act 2 of 2000 (PAIA)
  Section 32 of the Constitution of the Republic of South Africa, 1996

    3. Challenges to PAIA

There have been problems in the implementation of the Act and its use has been
limited. A survey conducted by the Open Democracy Advice Centre in 2002
found, "on the whole, PAIA has not been properly or consistently implemented,
not only because of the newness of the Act, but because of low levels of
awareness and information of the requirements set out in the act”7. It can even
be argued that the objectives of PAIA have not yet been fully realised and
perfected, primarily because the public has not been properly educated and
made aware of the existence of the Act. The situation is worse in the private
sector, where even some private bodies themselves are not aware of their
obligations under PAIA. Consequently, ordinary people hardly make use of the
provisions of the act. Similarly, both public and private bodies have not yet
embraced and incorporated the precepts of PAIA as part and parcel of their

Furthermore, concern has been expressed from various quarters about the
ineffectiveness of the Act's dispute-resolution processes. Litigation is widely
recognized as being too inaccessible and cumbersome to be an effective tool of
to enforce the freedom of information rights in the Act and in the Constitution

The challenges do not only relate to lack of education and awareness on the part
of ordinary citizenry and public officials, but also the lack of institutional
arrangements to dispatch information when it is requested. Enforcement and
resource limitations highlight the key challenge to successful realisation of the
implementation of access to information process8. More often than not,
information is delayed primarily because institutions take their own time to
respond to requests for information. What worsens the situation is the fact that

  Allison Tilley and Victoria Mayer, Access to Information Law and the Challenge of Effective Implementation,
in The Right to Know, the Right to Live: Access to Information and Socio-Economic Justice (ODAC 2002).
  Lauren Hutton, ‘To spy or Not to Spy?’, Institute for Security Studies, monograph 157, 72

‘procedurally,       the    time     frames      imposed         by   PAIA,   although   not   unique
comparatively, is already proving burdensome’.9

     4. Grounds for refusal of access to a record

There are a number of exemptions where a private body can refuse to provide
information to an individual who requests such information10. PAIA attempts to
balance the individual’s right to access to information against the right of a
private body to protect certain information. This section of the paper will discuss
these exemptions in brief, and this list is by no means exhaustive.

PAIA does not apply to records of the Cabinet and its committees, judicial
functions of courts and tribunals, and individual members of Parliament and
provincial legislatures. There are also a number of mandatory and discretionary
exemptions for records of both public and private bodies. Most of the exemptions
require some demonstration that the release of the information would cause

Firstly, the head of private body must refuse request for access to a record, if its
disclosure would involve the unreasonable disclosure of personal information
about a third party, including a deceased individual11. Secondly, information
request may be refused if a record contains commercial information, such as
trade secrets, scientific information etc, of a third party12. Thirdly, a request may
be refused if its disclosure would constitute a breach of a duty of confidence
owed to a third party in terms of an agreement13. Fourthly, the head of a private
body must refuse a request for access to a record if the disclosure of such a
record could reasonably be expected to endanger the life or physical safety of an
individual14. Fifthly, a request should be refused if the record is privileged from
production in legal proceedings unless the person entitled to the privilege has
waived such privilege15. Finally, a request can be refused if disclosure of a record

  Ibid, 73
   These exemptions are contained in part 3, chapter 4 of PAIA
   Section 63 of PAIA
   Section 64 of PAIA
   Section 64 of PAIA
   Section 65 of PAIA
   Section 67 of PAIA

contains information about research being carried out or to be carried out, and if
this were to be disclosed, it would likely expose a person carrying out the
research, or the subject matter of the research, to a serious disadvantage16.

These exemptions must be balanced against a public-interest test that requires
disclosure if the information shows a serious contravention or failure to comply
with the law17 or an imminent and serious public safety or environmental risk18,
or where the public interest clearly outweighs the harm contemplated in the
provision in request19. Thus the public interest clause in PAIA trumps all the
exemptions. Even if the exemptions pertain to issues of national interest, if the
advantage of knowing the information is demonstrated to be ‘greater than the
harm in making the disclosure, then information should be released on the basis
of that interest’20.

Part II


     1. What is a Private Body?

It is important to determine whether a body is a public or private body because
in order for a person, who requests information, to gain access to such
information held by a private body, that person needs to show that the
information is required to protect another right, whereas that is not the case for
information that is held by a public body. In the Hlatshwayo v Iscor21 judgement,
the court had a task of determining whether Iscor was a public or private body.
Iscor contended that the requester of the record was not entitled to receive the
information because they were a private body. The judge held that Iscor was a
public body. He reached this conclusion after considering a number of factors
such as the objectives of the company as well as the amount of power wielded
by government by virtue of their large shareholding in the company as well as
through the provisions of the 1928 and 1979 Steel Industry Act.
   Section 69 of PAIA
   Section 70 (a)(i) PAIA
   Section 70(a)(ii) of PAIA
   Section 70 (b) of PAIA
   Lauren Hutton, ‘To Spy or Not to Spy, Monograph 157, Institute for Security Studies, 69
   Hlatshwayo v Iscor (Case 4636/2002 TPD)

In the IDASA22 judgement, the court had to decide whether political parties were
public or private bodies in accordance with the definition provided in PAIA. The
court found that political parties remained by their nature private bodies. It held
that the division between the categories of public and private is by no means
impermeable. The court further held that entities may perform both private and
public functions at various times.

For the purposes of PAIA, a private body is, firstly a natural person who carries
or has carried on any trade, business or profession, but only in such a capacity;
secondly a partnership which carries or has carried on any trade, business or
profession, but only in such a capacity; and                   thirdly any former or existing
juristic person. It is crucial to note that these provisions apply retrospectively.
Thus an individual can request information from a juristic person even if such
private body has been dissolved.

There have been suggestions that some companies, although private should be
treated as public bodies for the purposes of PAIA, and therefore should be
amenable to the statutory purpose of promoting transparency, accountability
and effective governance23. These include ‘listed public companies that dominate
the country’s economic production and distribution’24.

     2. PAIA and the private sector

     2.1. General provisions

South Africa’s position regarding the right to access to information is unique in
that it provides for South African citizens with a right to gain access to
information held by private bodies. This right is provided for both in the
Constitution as well as the national freedom of information legislation.

Section 50 of PAIA regulates the right of access to records of private bodies.
According to this section, an individual must be given information held by a
private body if certain requirements stipulated in the Act are met. First, the

   IDASA & Others v ANC and Others 2005(5) SA 39 CPD
   Unitas Hospital v Van Wyk (2006) SCA 32 (SA), p20 para 40

record requested must be required for the exercise or protection of any rights25.
Secondly, the requester must comply with procedural requirements in the Act
relating to a request for access to a record26.

A record is defined in the Act as ‘any recorded information, regardless of form, in
possession or under the control of the public or private body, whether or not
created by that public or private body’27.

2.2. Private sector compliance with PAIA statutory requirements

There are several statutory obligations imposed by PAIA on the private sector.
Within six months after PAIA came into effect, private bodies were expected to
compile a manual containing that body’s contact details, as well as a description
of the records of the body28.

All private bodies, except for the public companies were given until 31 December
2005 to comply with section 52 obligations. This means that all sole proprietors,
partnerships, private companies, close corporations, section 21 companies and
body corporates were given until the end of 2005 to comply with these
obligations29. A long-term exemption, which applies to all private bodies except
public companies and certain private companies, was given until 31 December

The question that needs to be pondered is whether the private sector has
complied with these statutory provisions. Unlike in the public sector, where there
Public Service Commission has published statistics of compliance by that sector,
there has been no studies carried out that particularly concentrate on the
implementation and usage of PAIA in relation to the private sector.30 There is a
need for in-depth review of the private sector compliance with the statutory
provisions, as well as the general compliance with PAIA.

   Section 50(1)(a) Promotion of Access to Information Act 2 of 2000
   Ibid, section 50(1)(b)
   Section 1 of the Promotion of access to Information Act 2 of 2000
   Ibid, section 51(1)
   Government Gazzette no 27988
   PAIA Civil Society Shadow Report, 2009, p4

     2.2 Whose and which Rights are protected?

Any stakeholder may request access to information from a private body.
Stakeholders include employees, unions, and government at various levels,
media, customers, suppliers, financial institutions, various non-governmental
organisations, and the public at large31. These stakeholders have a justifiable
claim to know large amounts of information about a private body’s actions and
intents. The public’s right to know advocated by PAIA means these stakeholders
have interest in obtaining corporation information about management and

In the case of a request for access to information held by a private body, the
requester must indicate that the information requested is required for the
exercise or protection of any right. The rights contemplated in PAIA include any
rights conferred on an individual by the Constitution as well as by national laws
and international legal instruments. The courts have ruled that in terms of s 50,
the applicant need to put up facts which prima facie establish that he has a right
which access to the record is required to exercise or protect.32

However, the requirement set by the courts in the Cape Metropolitan Council
judgement is too high. In this case, the court held that ‘information can only be
required for the exercise or protection of a right if it will be of assistance in the
exercise or protection of the rights. It follows that, in order to make out a case
for access to information in terms of s 32, an applicant has to state what the
right is that he wishes to exercise or protect, what the information is which is
required and how that information would assist him in exercising or protecting
that right’33. This requirement may discourage the public from using PAIA to
access information from private bodies as this threshold is rather cumbersome.
This is clearly contrary to the objects of PAIA of promoting transparency in the
private sector.

The approach of Judge Cameron in the Unitas case is desirable in order to
advance transparency in the private sector. He argues that it is necessary ‘to
consider the extent to which it is appropriate in the case of any private body to

   Fiammetta Borgia, ‘Corporate Governance and Transparency, Role of Disclosure: How Prevent New
Financial Scandals and Crimes?, American University Transnational Crime and Corruption Center, 20
   Claase v Information Officer, South African Airways (pty) LTD 2007 (5) 469 (SCA), p 473, par 8
   Cape Metropolitan Council v Metro Inspection Services (Western Cape) CC

further the express object of promoting transparency, accountability and
effective governance in private bodies’34. If South Africa is to move from the
culture of secrecy, created by apartheid, companies should be encouraged to
practise principles of transparency.

     3. The Impact of Case Law on the private sector compliance with

Our courts have decided a number of cases dealing with section 50 of PAIA. This
section of the paper will examine these cases, and analyze the impact they have
on the private sector compliance with PAIA. The question of whether these
judgements encourage or discourage the private sector to comply with PAIA will
be examined.

Judge Cameron suggested, in his minority judgement in the Unitas case, that
‘we must be faithful to the objects of PAIA and the constitutional setting from
which it springs’35. That object or purpose of PAIA is to encourage the spirit of
openness and transparency in South Africa, both in the private and public
sectors. However, the rigid interpretation of the word ‘required’ in section 50 of
PAIA by many of our courts discourage the use of PAIA to request information
from private bodies. The majority in the Unitas case held that ‘if the requestor
cannot show that the information will be of assistance for the stated purpose,
access to that information will be denied’36. The court went further to hold that
‘mere compliance with the threshold requirement of assistance will not be

It can be argued that our courts make it difficult for individuals to enforce their
rights to access information from private bodies, and this is contrary to the
objects of PAIA. For example, in the IDASA judgement38, the court held that the
right to access to information did not exist in the abstract: the enquiry was a
factual one and the person seeking information had to make out a case on
papers. This court went further to state that ‘our courts had held that the word

   Unitas Hospital v Van Wyk (2006) SCA 32 (SA), p19 para 40
   Ibid,p 15 para 31
   Ibid, p9, para, 17
   Institute for democracy in South Africa and others v African national Congress and others 2005 (5) SA 39 (c),

‘required’ ….had to be understood to mean ‘reasonably required’, provided that
this was understood to connote substantial advantage or an element of need’.39

The question that arises is how one determines when the information is ‘required
for the exercise of protection of a right’. The meaning of ‘required’ in section 50
of PAIA was also interpreted in the Clutchco40 judgment, where the court held
that this term means reasonably required, provided that it is understood to
connote a substantial advantage or an element of need. The judge further said
that ‘the machinery established by legislation and the common law for the
protection of shareholders is not lightly to be disregarded. In enacting PAIA
parliament could not have intended books of a company, great or small, should
be thrown open to members on a whiff of impropriety or on the ground that the
relatively minor errors or irregularities have occurred. A far more substantial
foundation would be required’41.

The court’s interpretation in the Clutchco case is rather narrow, especially since
corporate governance laws and guidelines promote transparency and encourage
universal adherence to a set of business principles of corporate governance that
promote information disclosure. A lot of shareholders and stakeholders are
interested    in   receiving     information     that   would     assist   them     verify    that
management is operating the business with the best interest of all shareholders
and stakeholders, and not to unduly benefit any other parties 42. Moreover, the
main objective of PAIA is the disclosure of information as opposed to secrecy,
and the Act should be interpreted as much as possible to promote this
purpose43. Therefore ‘where appropriate, courts should encourage transparency,
accountability and effective governance in private institutions’.44

   Ibid, para 33-35
   Clutcho (pty) LTD v Davis [2005] 2 All SA 225 (SCA)
   Ibid, para 17
   UNCTAD, ‘ Guidance on Good Practices in Corporate Governance Disclosure, UNCTAD/ITE/TEB/2006/3
   SA Metal & Machinery Co (pty) Ltd v Transnet Ltd 2003 1 All SA 335 (W)
   Unitas Hospital, supra, no???, p 16

     4 Promoting the culture of transparency in the private sector

            a. General

The private sector plays a critical role in improving the welfare of societies. It
can assist create economic wealth that elevate people out of poverty and
increase access to health care, education and other crucial public services45.
Thus, as this sector is one of the essential components of every country’s
economy, it is important to promote a culture of transparency and ensure
maximum economic results.

The recent global economic crisis has been attributed partly to lack of culture of
transparency in the private sector. This crisis has ‘revealed how excessive risk
taking within companies has been fuelled by the lack of transparency,
accountability and integrity which allowed abuses and corruption to go
unchecked’46. After so many scandals and financial crises, the issue of
transparency in corporate governance has become the debate du jour47. It is
widely argued that those companies that continually lack transparency postpone
the inevitable, which is a swift failure of such corporation. Companies get
exposed to material risks as a result of lapses in corporate governance. These
risks threaten their ‘financial stability, increasing the vulnerability of financial
systems and the broader economy’.48 On the other hand, corporate compliance
and transparency pays direct rewards. A commitment to ‘clean business seems
to boost rather than harm immediate business prospects’.49

Transparency is constructed on the free flow of information50. Increasing
transparency means the market mechanisms operate closer and closer to true
efficiency, and gives shareholders and other stakeholders more authority.
Moreover, increasing transparency is a required standard requirement to protect
the shareholders’ wealth by ensuring that a board of directors is characterised

   Transparency international Global Corruption Report 2009: Corruption and the Private Sector, 9
   Gerard Zovhighian, ‘Corporate Governance and Access to Information’, Tools for Transparency and Good
Governance, 26/05/09
   Fiametta Borgia, supra note 26, p 20
   Transparency international Global Corruption Report 2009, supra, note 29, p88
   Ibid, p5
   UNDP Programme on Governance in the Arab Region, accessed at

by   independence,         willingness      to   answer      hard    questions,      a    diversity   of
membership, and accountability.

Most countries note in their laws and codes that there is a need for companies to
disclose to shareholders and other stakeholders the financial and operational
information of the companies. Commonly this is mandatory by law, regulation
and listing requirements, however some guidelines and best practice documents
also deal with the issue51. One of the most important tasks of the board of every
company is to make sure that, shareholders and other stakeholders are provided
with high quality disclosures on the financial and operating results of that

            b. Access         to     information,          transparency           and      corporate
                 governance in South Africa

Good corporate governance is critical in the private sector as it provides a
framework to secure investor confidence, augment access to capital markets,
encourage growth and strengthens economies by providing ‘clear rules of the
game53. It is crucial because company’s success or failures are dependent on the
way governance systems work54.

Transparency and accountability are one of the cornerstones of good corporate
governance. They are interconnected notions and reciprocally reinforcing55.
There can’t be accountability if there is no transparency, and transparency would
be of no value unless there is accountability. The existence of both transparency
and accountability add to an efficient and equitable management of an

   ibid, p 27
   UNCTAD, ‘Guide on Good Practices in Corporate Governance Disclosure’, available at <>
   Gerard Zovighian, supra note 31
   Fiammetta Borgai, supra note26, p 6
   UNDP Programme on Governance in the Arab Region, supra, note 33

The OECD definition of corporate governance mentions that the process of
governing a company should be conducted transparently57. The corporate
governance framework should ensure that timely and accurate disclosure is
made on all material matters regarding the corporation, including financial
situation, performance, ownership and governance of the corporation58. This
principle recognises that shareholders and other stakeholders need information
about how the company performs as well as information about corporate
objectives and foreseeable risk factors to monitor their interests59.

It is the responsibility of the board to create this overall context of transparency.
The King Report II particularly obliges the board of directors to present
shareholders and other stakeholders with information on the financial and
operating results of a company to allow them to correctly comprehend the
nature of such business, its current state of affairs and how it is being developed
for the future60.

The King Report is aimed at promoting the highest standards of corporate
governance in South Africa. The first King Report advocated for an integrated
approach to good governance in the interests of a wide range of stakeholders61.
This was in line with many corporate governance laws and codes around the
world which emphasise the need for a corporation to address the interests of a
range of stakeholders in order to promote the long-term sustainability of a
company. When the board fulfils its duty, including the responsibility to disclose
information, shareholders and other stakeholders would find comfort in knowing
that the company is being run efficiently.

The second King Report urges companies seeking to improve on their disclosure
practices     to   recognise       the    importance       of   the    relationship      between       the
corporation and its community. The report acknowledges that there is a need in
corporate governance to move away from just focusing on the profit of
shareholders (single bottom line) but to a system that embraces the economic,

   OECD defines corporate governance as: ‘The capacity of developing an effective model of corporate
governance is a fundamental requirement for the development of an advanced economic system, which is able to
generate transparently and effectively a long-term value, on the microeconomic side as well as on the
macroeconomic level.
   OECD principle IV, <>
   Fiammetta Borgia, supra note 26, p12
   King Report II (Dekker 2002)
   King Report I (Institute of Directors) 1994

environment and social aspects of the company’s activities (triple bottom line62.
This provision in the King Report goes hand in glove with PAIA, and gives
individuals rights to request information not only pertaining to shareholders’
rights but other rights relating to, for example, the environment.

            c. Access to information and the new Companies Act

The new companies’ Act (the Act) promotes transparency and accountability in
the private sector. This is in sync with the object of PAIA of promoting
transparency in the private sector. Although this Act has not commenced, it is
important to look at the provisions that promote a culture of transparency in the
private sector.

This Act provides that company records ‘must be accessible at or from the
company’s registered or another location, or locations within the Republic’.63 Any
individual who has an interest in any securities issued by a company has a right
to inspect and copy the information in the records of the company.64
Furthermore, stakeholders have a right to any information to the extent granted
by the company’s Memorandum of Incorporation.65 The Act provides that an
individual may directly approach a company requesting the information in
writing or in person, or in accordance with PAIA.

The Act is clear that the rights of access to information set out in the Act are ‘in
addition to and not in substitution for, any rights a person may have to access
information in terms of’ section 32 of the Constitution, PAIA, or any other

A company’s failure to accommodate any reasonable request for access, or
unreasonably refuse access to any record that a person has a right to inspect, is
an offense67. The same goes for attempts by a company to impede, interfere

   King Report II, supra note 40
   Section 25(1) Companies’ Act of 2008
   Ibid, section 26I1)(2)
   Ibid, section 26(1)(b)
   Ibid, section 26(4)
   Ibid, section 26(6)(a)

with the reasonable exercise by any person of the right to access to

These provisions in the Act encourage greater transparency in the operation of
companies, and will assist in ensuring that the objects of PAIA are fulfilled.
However, it remains to be seen whether companies will comply with these
provisions, or whether stakeholders would have to litigate in order to force
companies to comply with their obligations.


Even though South Africa has one of the most revered information legislations in
the world, information, from both the public and private sector, is not always
made available to the public when needed. This is to suggest that the
implementation of PAIA has been found lacking and sluggish in pace. There are
always attempts to subtly prevent the public from accessing information
including records and documents.

Illegal activities like fraud and other financial crimes can threaten the stability
and efficiency of a private body. Freedom of information is a proven anti-
corruption tool, and improved access to information improves transparency and
accountability both in the public and private sector, and thus assisting in the
prevention of these illegal activities. Therefore, access to information will
enhance private sector accountability and promote zero tolerance for corruption.

Furthermore, the right to information lays a foundation upon which to build good
governance, transparency and accountability. Policies of openness engender
greater stakeholder confidence in a private body.

     Ibid, section 26(6)(b)


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