This is a better version of my last post. Moneyweb published it. The word in the hallowed legal chambers is that it's getting a lot of attention. The whole article is below because Moneyweb has a paywall. It's a good news publication - please read it.
There’s talk of fightback against Tau with his legal sector BEE code
This could be the last time we are taken for fools (and litigation will show the extent to which the government bulldozes legislation through).
By Paul Janisch 2 Oct 2024 04:05
‘Taunting the legal sector’ and ‘cocking a snook at business organisations like Busa’ – Minister of Trade, Industry and Competition Parks Tau. Image: GCIS
BeyondWords
There has been very little black economic empowerment (BEE) activity from the Department of Trade, Industry and Competition (dtic) since Rob Davies vacated his post as minister of the then Department of Trade and Industry in 2019. To most of us this was a case of no news is good news.
The good news came to an end when current minister Parks Tau gazetted the legal sector code in September.
Normally this is an unremarkable event; most of the time these codes are received, absorbed and implemented.
This time things are hopefully a little different. There is a backstory behind this code and its gazetting. The Draft Legal Sector Code closed for comments in March 2021.
The code lay dormant until just before the May 2024 elections.
The story goes that John Jeffery, then deputy minister of justice and constitutional development, asked the Big Five law firms whether they would litigate if the draft code was gazetted. This was answered in the affirmative. Jeffery consequently didn’t pull a National Health Insurance (NHI) on the legal sector.
It’s not clear why the Big Five law firms objected to the code, but I am willing to wager a small amount of money that it wasn’t about the transformation of the sector.
Gazetted
Tau has now gone ahead and gazetted the code, which is binding on all entities that operate in the legal sector. It’s very likely all legal firms will need to use this code for their next BEE certificate, so there’ll be no lead-in time for acclimatisation.
This is a very typical ANC stunt, specifically when it comes to empowerment legislation.
The ANC knows that empowerment is a very emotional concept and that it can push through codes and policies because those who have to implement them are unlikely to complain.
But just because the legislation deals with empowerment and transformation doesn’t mean it’s right. Those of us who derive a living from BEE advice know how badly thought-out almost every single BEE code is.
Bursaries for black students
Davies left South Africa with a requirement for the provision of bursaries for black students at tertiary institutions. It’s obvious that he was trying to solve a ‘fees must fall’ problem.
But he set the targets too high, offered too few points, and didn’t get the South African Revenue Service (Sars) to provide some sort of tax break for compliance. As a result, these points are largely ignored because of the sheer expense of compliance.
I suspect something similar is at play with the Legal Code.
Wordplay
Tau’s press release states:
“This administration has committed itself to accelerating transformation, guided by the preamble of the Constitution of the Republic of South Africa which emphasises the need to correct the injustices of the past. This is captured in the statement of intent of the Government of National Unity (GNU) [author’s emphasis],” Tau said.
This is a smoke screen. He is suggesting that there is an endorsement from the GNU, tacit or express. This is not true.
The DA is not particularly impressed with BEE legislation and would quite happily change it for something more effective. No, this gazetting is the old ANC at play.
Simply put, it’s a shot across the legal fraternity’s bow.
And the legal fraternity cannot ignore it …
I offer a few reasons why a legal challenge would benefit our economy:
- If John Jeffery asked the Big Five whether they would litigate, then the justice department must be aware of the issues that have been submitted. It is simply daring the legal sector to make the next move. By not reacting we become the pawns the ANC government has always treated us as.
- Part of the litigation will show whether the dtic and the justice department paid any heed to the comments they received. It’s a known fact that this government (GNU or otherwise) does not pay much attention to comments on legislation. Litigation will show the extent to which the government bulldozes legislation through.
- The BEE codes are designed to benefit those who least need the benefit. This is an article in itself. Litigation may show that the legal sector codes are exactly the same, where we have certain silks being briefed for cases that they have no intention of winning.
- Not only is Tau taunting the legal sector, he’s also cocking a snook at business organisations like Business Unity South Africa (Busa) and Business Leadership South Africa (BLSA). Every week both organisations publish articles about the importance of business-friendly legislation and adherence to the rule of law.
- There is a history of court cases that have been fought in the name of transformation. The B-BBEE Commission has found itself in court on a few occasions because its findings have been devoid of fact. On each occasion the court has found against it. Similarly, the South African National Accreditation System (Sanas) was taken to court by SERR Synergy, and didn’t bother to defend the action. Litigation is nothing new here.
- Perhaps the most important reason why this code needs to be taken to court is because South African jurisprudence will benefit. Empowerment legislation, like every other piece of legislation in the country, is subject to the Constitution. Thus far there has been a fear to litigate because of the potential negative consequences that such litigation might invite. If anything, South African law needs certainty.
Empowerment-related legislation is a sort of sacred cow. We all suffer as a result.
I have scoured the deepest recesses of the internet to find a copy of the code. Nothing has appeared yet. Perhaps the minister is waiting for the legal papers before he decides to share the code with us.
We’ve been taken for fools for many years. This could be the last time.