Investors turn away over "rule of law" controversy

Efforts by the Swazi government to attract foreign direct investment are being undermined by its own disregard for the "rule of law", business leaders said this week. "We are waiting for the return of the rule of law. Investors want to feel comfortable, and that's the bottom line," said Paul Friedlander, chief executive officer of the agricultural and retail conglomerate, Swaki. The government has ignored high court and appeal court rulings it disliked, and overturned rulings of the Industrial Court. Businessmen interviewed by IRIN say they need an independent judicial system to safeguard their property. Swaki, one of the oldest conglomerates in the kingdom, this year closed down its automotive division, Tracar, leaving Swaziland without a local representative for Nissan, Fiat, Mercedes Benz and other vehicle marques. The Times of Swaziland reported that Swaki had suspended new investment in the country until the crisis in the judicial system was resolved. Robert Dance, charge d'affairs for the US embassy in Swaziland, said at a panel discussion on the government's role in facilitating investment that one garment factory, concerned about the security of its investment in Swaziland, chose to locate to a neighbouring country. "We were informed that the company, which would have constructed two factory shells, bringing an investment of about R50 million (US $6.7 million), then decided to channel its resources into Lesotho," he noted. The full bench of Swaziland's Court of Appeal resigned last year after the government chose to ignore its ruling that King Mswati could not bypass parliament and rule by decree. It had also ordered the arrest of the commissioner of police for contempt of court, to no avail. Despite the efforts of a mediator from the London-based Commonwealth secretariat, Swaziland has been without its highest court since November 2002. Defending the government's actions, Enterprise and Employment Minister Lutfo Dlamini said: "It is not true that there is a rule of law crisis in Swaziland. We are talking about only two rulings." However, business leaders can cite several court rulings that have been ignored by government. Last week the police refused to allow labour leaders to deliver a petition to delegates at a developmental summit hosted by King Mswati, although the unionists held a court order permitting them to do so. Local press reports quoted Sabelo Hlope, the police commander for the Hhohho region, as telling the unionists: "Your court order does not matter, because the bottom line is you are not going there [to the summit]." More upsetting to the business community has been palace intervention in industrial matters. Workers unhappy with Industrial Court rulings about pensions and dismissals have gone to the palace to seek intervention. The royal officials have on occasion overturned court verdicts. Businessmen complain that they do not get to tell their side of the story, and traditional authorities are prejudiced toward Swazi complainants. "What is the use of an Industrial Court if its rulings are ignored?" a manager at a manufacturing company located within view of Lozitha palace, in central Swaziland, told IRIN. "Declining investment does not come as a surprise to us. We have been warning about this for years. Businessmen need to feel their investments are safe. Only the courts can ensure that," said Jan Sithole, secretary-general of the Swaziland Federation of Trade Unions (SFTU), in an interview with IRIN. The SFTU led a national workers' protest this month, calling for reforms, with restoration of the rule of law a central demand. "This is not a political demand, it is strictly economic. Our members are losing jobs. Unemployment is at 40 percent, and potential workers are denied opportunities because a lawless government is scaring away investors," Sithole said. The Swaziland Investment Promotion Authority was established in 1998 to make it easier to do business in the country. Then King Mswati refused to sign into law the Industrial Relations Act of 1998, written with the input of labour and employers and passed by parliament, until palace advisors had added amendments. The palace amendments criminalised some union activity, and financially penalised unions that called strikes. In response, the United States suspended Swaziland's trade privileges, on which the kingdom's growing manufacturing sector depended. The law was revised, but not before Nein Tsing, a Taiwanese garment company, withdrew plans to invest US $94 million, and employ 8,000 Swazis. "Now even local companies that have been here for decades are reluctant to invest more," said a source with the Swaziland Chamber of Commerce.