Court dismisses Solidarity challenge to ‘unlawful’ coronavirus fund

Trade union Solidarity is heading to the Constitutional Court after it failed in its bid to have the empowerment-based criteria for the allocation of coronavirus relief funds to tourism businesses affected by the pandemic declared unlawful.

Solidarity and its civil rights associate, AfriForum, had approached the North Gauteng High Court to oppose the application of broad-based black economic empowerment codes of good practice to determine who is eligible for the R200m in emergency funding earmarked for tourism companies.

Judge Jody Kollapen on Thursday dismissed the application by the parties, stating that the criteria of BB-BEE codes of good practice did not perpetuate unfair advantage by black companies.

Following the judgment, Solidarity said in statement that it would “ask the Constitutional Court to decide on an urgent basis whether the granting of relief on the basis of race is constitutional.”

“It is imperative that South Africa gets legal certainty on whether, in a state of disaster, the Constitution allows for discrimination based on race in order to qualify for relief,” said Solidarity CEO, Dirk Hermann.

The two parties had argued that using the empowerment-based codes would not allow white-owned companies to compete fairly against black-owned entities, adding the the system was unconstitutional.

Early in April, a R200-million fund was announced by the Department of Tourism to assist small and medium tourism-related businesses whose operations have been financially impacted by Covid-19 related operational challenges. Funding is to be capped at R50 000 per business. 

The sector is one of the industries hardest hit by the pandemic as travel restrictions have been rolled out across the globe. Accommodation establishments will remain closed as the lockdown moves to level 4, which has allowed a partial return to economic activity by different industries.

Hermann said it was “sad”  that the union would resort to the Constitutional Court because “government is set to continue with the discriminatory race criterion it imposed to qualify for emergency relief”, further describing government’s move as unjustifiable.

Tourism Minister Mmamoloko Kubayi-Ngubane said on Tuesday the department was awaiting the court’s decision before moving ahead with the allocation of funds to applicants. She described the matter as “worth defending”. 

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