Martin Hood, a lawyer representing three private security firms, told MPs they did not believe the amendments would lead to greater regulation of the industry.

Hood represents SSG Operational Risk Services, Nicholls Steyn and Associates, and Eventsafe Security Services.

Hood said currently the Private Security Industry Regulatory Authority (Psira) was not doing its job, and the legislation would do little to change this.

"It (Psira) regards the collection of fees [as] more important than the regulation of the industry."

He accused Psira of not conducting proper enforcement, specifically where "fly-by-night operators" were concerned.

"It concentrates on the established operators, because it is easier to victimise them than to go after the unregistered operators."

Hood said Psira needed greater capacity to regulate the industry properly.

The Private Security Industry Regulation Amendment Bill, if passed, will restrict foreign ownership of security companies. Hood said there was no proof to support the government's view that foreign ownership of these companies affected national security. He said established foreign owners would take their money elsewhere.

"It would also send a message to other investors that foreign capital is not welcome in this county."

Hood proposed that any reference to limiting of foreign ownership be removed from the bill.

The bill gave Police Minister Nathi Mthethwa too much power to determine the percentage of foreign ownership in the industry, he said.

"There is a fundamental problem, not only in these proposals, but in most legislative proposals from government, that is sweeping powers that are given to ministers or officials without public scrutiny or accountability."

On Tuesday Mthethwa threw his weight behind the amendments, saying the growth of the private security industry in South Africa to the largest in the world demanded greater regulation.

Mthethwa brushed aside criticism that limitations on foreign ownership would lead to disinvestment.

"Indications are that when the time comes they (foreign owners) will sell the relevant shares to comply with the law, not close down as we are led to believe," he said.