ConCourt shoots down govt appeal over BEE in Covid-19 tourism funds case

• The Constitutional Court will not hear an appeal against a ruling that found it was wrong to include B-BBEE as a criterion for the state’s Covid-19 tourism relief grants.
• The ruling constitutes a win for trade union Solidarity and lobby group AfriForum, who initially took the tourism department to court in 2020. 
• Funds paid out to small businesses under the relief scheme do not need to be returned. 
• For more financial news, go to the News24 Business front page.

SA’s highest court has declined to hear an application for leave to appeal a lower court’s ruling that found the state was wrong to include Broad-based Black Economic Empowerment (B-BBEE) as a criterion to access Covid-19 relief grants in the tourism sector. 

In April 2020, as the Covid-19 pandemic caused local and international tourism to grind to a halt, then-tourism minister Mmamoloko Kubayi set up a Tourism Relief Fund.

Some R200 million was to be allocated for once-off payments of up to R50 000 for struggling small businesses. The minister included the B-BBEE status level of applicants as one of the criteria for funding. 

Trade union Solidarity and lobby group AfriForum then took the Department of Tourism to the North Gauteng High Court in Pretoria, arguing there was no need to use “race as a benchmark” for relief. 

While they lost their initial case, AfriForum and Solidarity won on appeal in the Supreme Court of Appeal (SCA) in September 2021. 

Codes 

The minister argued she was bound to include the B-BBEE level of applicants as one of the criteria for relief under the B-BBEE Tourism Sector Code.

But the court found that the minister was mistaken, as relief grants administered under the Disaster Management Act could not be viewed as grants “in support of B-BBEE”. 

The SCA said: 

The court did not, however, rule that the R200 million already distributed to small businesses should be recovered, noting that neither Solidarity nor AfriForum has asked for this. 

Appeal bid 

The department then applied for leave to appeal the SCA ruling before the Constitutional Court. 

On Wednesday, the apex court denied leave to the appeal. This means that the SCA’s September 2021 ruling stands. 

In its ruling, the Constitutional Court noted that the issue was “moot” as SA’s state of disaster had long been lifted and the funds already distributed. 

READ | Covid-19-ravaged tourism sector on its way to recovery, with over 100% increase in domestic trips

And while it would at times rule on “moot” issues, an increased workload means it must pick and choose its cases carefully. 

Solidarity deputy chief executive for legal matters, Anton van der Bijl, said that while some could view the case as “academic”, it still set an important precedent. 

It would be harder for the state to include B-BEEE requirements as part of the criteria for relief funds in the future, he said.