This is truly an hysterical article. I would normally Tweet on these things but it warranted a lot more than 140 characters. Ann Crotty reports that the Public Investment Corporation (PIC), which manages about R800 billion of funds on behalf of the Government Employees Fund, is in discussions with the Department of Public Works to resolve concerns about the PIC's black economic empowerment (BEE) status.
PIC chief operations officer Albertina Kekana said various government departments and local authorities were tenants of properties owned and managed by the PIC and noted, "we sometimes have difficulty with renewing leases because the department's procurement officers say we're not empowered".
And the upshot of this lack of empowered status
in some instances the PIC struggled to collect rent from the departments and local authorities.
This either goes to show how clueless government departments are about BEE (which they are) or that PPPFA cannot come to terms with state-owned entities bidding for government contracts. The latter is addressed in the new regulations.
The only BEE solution I can think of is the BEE that of a BEE Facilitator. Paragraph 3.4.3 of code 100 states
The Minister may by notice in the gazette, designate certain Public Entities as BEE Facilitators. In calculating their Ownership score, Measured Enterprises must treat BEE Facilitators as having rights of Ownership held:
- 100% by Black People;
- 40% by Black Women;
- 10% by black designated groups:
- without any acquisition debts; and
- without any third-party rights.
In other words they get the full 20 points for ownership. The DTI has done it before with PetroSA. I suppose the question is whether the PIC is a Public Entity. They are not in Schedule 2 of the PFMA but then neither is PetroSA. They do say that they are subject to three different acts - one of which is the PFMA.
Cyril doesn't like BEE lockins
Also from the Business Report today written by Mzwandile Jacks. Mzwandile is a great journalist - I've met him before
Bidvest chairman Cyril Ramaphosa yesterday launched a fierce assault on black economic empowerment (BEE ) lock-in agreements, saying they inhibited black access to profit.
He reckons it messes with the spirit of empowerment and he's right. Being locked-in because you fulfil certain BEE requirements is stupid and sorely lacking in any business sense. They've tried to alleviate this problem with the "once empowered, always empowered" rule, which Cyril says is open to abuse.
The "once empowered, always empowered", "continuing consequences", "high watermark" rule is a fantastic get-out clause for black players. They stay in the business for three years, make a bit of cash and go. The business continues to recognise the ownership level (albeit with reduced points) and everyone is happy.
However Ajay Lalu does not agree with me (he apparently drafted that useless verification manual)
Ajay Lalu, a BEE expert and partner at Bravura Consulting, said the "once empowered, always empowered" approach was enshrined in the financial sector charter. "This goes against the spirit of broad-based BEE," Lalu said.
I don't really understand this paragraph but if I am reading the bold correctly then Ajay is talking the most misinformed drivel yet uttered in the BEE world - and the competition for that accolade is fierce. Let's go back the preamble of BEE Act. And I quote
(to) promote the achievement of the constitutional right to equality, increase broad-based and effective participation of black people in the economy and promote a higher growth rate, increased employment and more equitable income distribution
If the rule is properly implemented then you'll achieve a few of these requirements and the underlined part.
Caird has developed an accounting officer's template for EMEs that contains all the necessary information that an EME might need to adequately demonstrate their EME status. This document contains an affidavit that contractors can sign confirming their EME status (this is very useful for procurement departments). The cost is R350 - for more information email me.