COMMERCIAL LAW: Public scrutiny of company information

In the recent case of AllPay Consolidated Investment Holdings (Pty) Ltd and Others v Chief Executive Officer of the South African Social Security Agency and Others (No 2) [2014] ZACC 12 the Constitutional Court looked at what is regarded as an “organ of state” and what the responsibilities are of an “organ of state”. The Court held that when organs of state enter into agreements their obligations go beyond the contractual and enter the realm of Constitutional. Organs of state are bound by the Constitution whose values are based on the principles of accountability, responsiveness and openness, and the organs of state must “respect, protect, promote and fulfill the rights in the Bill of Rights.” The South African Social Security Agency (SASSA) is clearly an organ of state. The Court held that the entity which SASSA had entered into a tender with is also an organ of state, not based on the “control test” but rather based on the fact that its function is fundamentally public in nature. The contract between the parties also stipulated that the tender was subject to the Constitution.

In light of the above, the Court found that not only was SASSA accountable to the people of South Africa, but so was the contractual party based on its public function. Accountability in this case would be ensured by “financial compliance with the Public Finance Management Act and general ministerial oversight.” The Court went on to say that although the contracting party became accountable to the people of South Africa as a result of this contract and the public power and public function that resulted from it, only the entity’s operations related to that project is open for the public to analyse. The entire operations of the entity are not open for public scrutiny.

The implication of this ruling is that, although a company’s financial information may be confidential, if that company performs a public function, such records may be subjected to public scrutiny. This will no doubt enhance transparent business practices relating to public tenders in the future.

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