Paul Janisch

Consulting, opinions and speaking engagements and a few other topics that I know quite a lot about

If you are looking for a realistic perspective of empowerment in South Africa and southern Africa (including Namibia, Zambia, Zimbabwe and Botswana), I am able to provide that perspective at your AGM or any other presentation. It's relatively clear from this blog that I know what I'm talking about. Over the last 20 years I've gained a very thorough understanding of the following topics

• Government procurement
• Parastatal procurement
• BEE trends within Africa
• Impact of BEE legislation
• Multinationals and empowerment within Africa

And I am very happy to provide you with an overview of these topics.

In addition I have consulted to a wide number of public and private organisations throughout South Africa on

• Public Private Partnerships
• Listed shareholding analysis
• Tax advice on BEE initiatives and tax structures (through a partner)
• Opinions on empowerment commitments that may be contractually binding
• BEE plans for tenders
• Joint Venture BEE certificates
• General opinions (similar to this one)

Or if you need someone to come in and find those points within your organisation for your next verification please contact me and we can discuss what is required. You can email me or phone me on (+2783) 227-1375.

Legal challenge against legal sector BEE code … An action that is long overdue, and likely to affect other sectors too.

This came as a bit of a surprise.  I was told that the big five law firms were going to launch an application to have the Legal Charter cancelled, removed, struck from memory etc.  The DTIC, DoJ and LPC got a little surprise for Christmas where Norton Rose submitted an urgent application to i) have  the codes suspended and ii) get them booted out of BEE orbit.

The papers are fascinating.  Here they are in two parts, complete with my notes. 

I wrote an article for Moneyweb on this application which was published today.  I've posted the whole article below but if you are a Moneyweb subscriber (and you should be) then the link will be up in perpetuity.

Legal challenge against legal sector BEE code … An action that is long overdue, and likely to affect other sectors too.

Just because legislation deals with righting the wrongs of South Africa’s apartheid past does not mean it is right – nor fair in law.

It has long been my contention that the black economic empowerment (BEE) codes of good practice were some fanciful creation of a department that had no idea of how an economy works. In this instance, the Department of Trade, Industry and Competition (dtic).

But because of the sensitivities surrounding empowerment legislation it has been largely left to its own devices, with codes being published that are devoid of logic and sense.

Almost all gazetted BEE codes happened during the Zuma era under then dtic minister Rob Davies.

Back then the ANC was powerful, and corporate South Africa kowtowed to each piece of legislation, lacking the appetite to question what was being foisted on them.

Fast forward five years, and the ANC is no longer a majority party. It is fundamentally weak and does not enjoy the same levels of fear and respect it had in the past.

Was Tau expecting continued kowtowing?

With this backdrop in mind, current Minister of Trade, Industry and Competition Parks Tau went ahead and gazetted the Legal Sector Code even though he was fully aware that if he did it would likely be challenged in court.

Read: There’s talk of fightback against Tau with his legal sector BEE code [Oct 2024]

Tau possibly thought this threat of litigation would be idle.

That was until 20 December 2024 when Norton Rose Fulbright South Africa Inc filed papers against the ministers of the dtic and the Department of Justice and Constitutional Development as well as the Legal Practice Council requesting the high court to firstly suspend the operation of this code, and secondly to review it and set it aside.

When a law firm fights for itself …

The court papers are an interesting combination of emotional ranting and legal arguments.

The emotional side observes that with the Legal Code having no lead-in period, Norton Rose will fall from a competitive Level 1 to a Level 6 in its next BEE verification (something most of the Big Five law firms will experience).

The firm goes into the potential business impact of this where clients may drop it because its BEE level has dropped. It also observes that it has certain commercial agreements that require it to retain a high BEE level.

Commercial risks aside, the legal argument is an eye-opener.

Norton Rose alleges that due process was not actually followed, an argument that I think can be led against all codes that have been published since 2007.

In addition, it points out that drafters have little idea of how a law firm works. A glaring example is procurement from black advocates; the affidavit is at pains to point out that this expense is pass-through procurement and is paid by the client so it does not become a procurement item.

All BEE sectoral charters may now be at risk

This legal action goes beyond the Legal Sector Charter. It has the potential to have almost all BEE sectoral charters declared null and void because they do exactly what Norton Rose argues is wrong in law.

It’s also a very necessary action because the government has run roughshod over business for decades with impunity. In each case, the dtic has argued that the codes are constitutional without providing supporting evidence to that fact.

In other words, it has been tempting concerned parties to take it to court to prove that the codes are unconstitutional.

For observers like myself these papers offer an insight into the way big business may actually view the various BEE codes.

It’s unlikely that Norton Rose (and the other large firms) didn’t alert its biggest clients that it was going to launch this application.

The potential for reputational damage in this action is massive.

It was not only the law firms that decided to take these codes on review – there must have been tacit consent from the larger firms.

The first shot has been fired. The response from the respondents is going to be very interesting.

I am expecting their papers to be full of the usual anti-transformation rhetoric.

However, somewhere in that response they are going to have to deal with the legality of their actions. We will for the first time in almost 20 years actually see how the government thinks – and what it ultimately thinks about the private sector.

Paul Janisch is a Johannesburg-based BEE consultant and analyst.

 

 

 

DimDat’s BEE move that turned into a fronting issue - naughty rich white men

As it turns out that the court found that there might have been a little (read a lot) misrepresentation about who the investors were behind the scheme.   I am referring to the Rob Rose article in Currency.   

I’m not going to go into the details of the deal, you can get that from Rose’s article.  The BEE part of this deal is that DimDat wanted to up their black ownership, it seems that their target was black female ownership.  The table below shows the timeline of this deal and the benefit it gave to Dimension Data.

Level	Valid Until	BO%	BWO%	BDGO%
2	03 Sep 2025	22.8	3.71	1.04
2	24 Aug 2024	24.77	3.56	1.43
3	14 Sep 2023	24.77	3.56	1.14
2	15 Aug 2022	78.04	43.68	1.33
2	13 Aug 2021	72.36	38.89	0.0
2	23 Jan 2021	71.51	37.99	0.0
2	28 Nov 2020	51.0	37.99	0.0
4	18 Nov 2019	32.66	7.12	0.0

The highlighted rows show when the deal was active.  You’ll see the certificate issued in November 2019 suddenly had an increase of about 30% black women ownership.   The 51% in the table was wrong and was re-issued again to expire in January 2021 and then again in August 2021.  I don’t have the actual certificates, I haven’t actually looked for them, so I can’t comment.  The upshot is that DimDat’s BEE ownership level goes up by about 40%, of which ¾ of that was black female ownership.  The change in the black percentage is derived from the black shareholders that own the listed shares.

HOW DID THEY DO THIS

They used STATEMENT AICT102: RECOGNITION OF OWNERSHIP IN THE SALE OF ASSETS.  It must have been that the sale of the DimDat campus amounted to about 40% of the value of the company (roughly).  There are conditions attached to these types of deals.

For Ownership points to be recognised the transaction:

Must result in the creation of sustainable businesses or business opportunities in the hands of Black people; and

Result in the transfer of specialised skills or productive capacity to Black people.

A Sale of Asset, Equity Instrument and Business must involve a separate Associated Enterprise which has:

No unreasonable limitations as to its clients or customers; and

Clients, customers or suppliers other than the Seller.

The whole transaction was apparently fronted (not the illegal type) by Sonya de Bruyn.  But behind her was a rather intricate scheme, that the court ultimately unpicked.  Rose suggests that there were allegations of fraud.  This then becomes a criminal case as well – well potentially.

What happens now? 

The six gentlemen in question have a lot of money.  A hell of a lot of money.  But then so does NTT (the shareholder of DimDat).   The pyscho six are going to appeal and it will end up in the Constitutional Court at some stage – read in MANY years’ time.  It must go to the constitutional court because it is the best case of fronting that I have seen.  Thus far there has only been one case and that dealt with the big trains at PRASA.   This will absolutely test the mettle of empowerment legislation.  Fronting is fraud and hence the conditions for fraud need to be proved.  But the Constitutional Court might give us some objective test for fronting and may even be forced to consider the constitutionality of BEE altogether.  

The mad skills development spend rush is very avoidable

SPEND LESS MONEY ON SKILLS DEVELOPMENT AND GET BETTER RESULTS

It’s coming to the end of your financial year and you’ve either not done enough about skills spend or you’ve done nothing.    If you’ve done nothing and your year end is December then you’ll struggle to get learners and the like sorted before South Africa goes on holiday – which is no later than the 16^th of December.

If you do manage to find the necessary people to train it will cost you A LOT OF MONEY, especially if you need disabled people.

If your year end is February then you’re still in trouble because you are going to pay a lot of money at the last minute.  It can be done and there are no shortage of service providers that can help you. Many of them are very respectable companies.

The best solution is formalise your informal training by virtue of an Internship for Internal people.  Something we call an INTRATERNSHIP.   The training exists in every organisation.  But it’s piecemeal and delivered by people who often don’t understand that they are imparting vital information. 

The INTRATERNSHIP programme is inward looking and focuses on training that’s vital for your organisation.  It looks to reinforce the skills and knowledge that exist within the organisation.   It’s supplementary to external training. 

WHY INTRATERNSHIPS

We are still exploring all the benefits of the programme.  Amongst these benefit are

• INTRATERNSHIPS create a training and learning culture within the organisation. Everyone is a trainer and recipient of the training
• INTRATERNSHIPS teach staff efficiencies that perhaps only a few know about
• INTRATERNSHIPS lead to continuity, even in times of change. An INTRATERNSHIP programme spreads knowledge across the organisation.  It reduces silos of knowledge.  If critical people leave then stakeholders can be assured that tasks can continue
• INTRATERNSHIPS become the industry standard. Once a person has completed the programme they are awarded a certificate co-signed by the organisation and RISE BUSINESS CONTINUITY. To quote one of our clients “We are the first company in our industry to implement INTRATERNSHIPS, in two years’ time all our competitors will be following suit.  We will have set the industry standard by then”.
• INTRATERNSHIPS concentrate on internal knowledge and training and cost a fraction of external training.
• ORGANISATIONS get to ultimately control the quality of the information being imparted.
• INTRATERNSHIPS are not limited to a class of employee. Every employee is able to take part in the process..

AND THE BLACK ECONOMIC EMPOWERMENT BENEFIT

Each INTRATERN is regarded as a CATEGORY C Intern.  This means that salaries of each black person on the programme are regarded as skills’ spend.  We know that we are able to attract 16 points on the DTICs generic BEE scorecard if there are disabled black employees in the organisation. 

Speak to us now.  We can save you a lot of money and create a strong learning culture in your organisation at the same time.

Email: [email protected]

Contact: 087 164 6660

Checkers Sixty60 a South African success story with a distinctly South African problem

Delivery drivers, specifically motorcyclists, are a necessary part of our lives in South Africa.  However they’ve recently been gaining more attention because of the nature of the job and their relationship to the company that they represent.  It was for this reason that Shoprite chairperson Wendy Lucas-Bull presented a summary of the working conditions that these riders are exposed to.  She told us that there were approximately 7000 riders that delivered for Checkers Sixty60.  They apparently earn way above the minimum wage but tend to attract legal foreign nationals to do the job.  With 23% being South Africans.  To quote Lucas-Bull    

"We are bringing in South Africans into that training course, 80% drop out before the 10 weeks (of training) is finished, and then after two years, we've only retained 8%."

"Why? Obviously, we are doing exit interviews … but the main thing we are getting back is that South Africans don't view that job as one that they want to do, and that is the challenge for us," she said, adding:

It is a well-paid job, but it is a high-risk job because you are on the South African roads all the time. The bottom line is that South Africans are not favouring that job even when it comes to bringing in unemployed individuals and giving them the training. They still drop out.

Each rider goes through a 10 week course.  That’s a good idea.  Sixty60 does need to make sure that the people delivering for them are capable at the outset.  If HelloPeter is anything to go by the drivers are not taught to be responsible on the roads.  This seems to be a common complaint on HelloPeter. 

We think there are two problems that Shoprite faces when it comes to their biker delivery people.  The first one is the ongoing training that is required to reinforce the values.  Each rider is a brand ambassador.  Everything they do has an impact on the brand.

The second one, and we believe that this may alleviate the issue when it comes to attracting South African riders, is a career path.  If you are a delivery rider then you are a delivery rider.  The more astute business-orientated people will set up a business that buys motorcycles and hires more riders.  These are in the minority. 

We’ve been working on this issue and have launched a Public Transport Online Programme that covers the necessary soft skills and a few technical skills that riders need to be aware of.  It’s a dynamic course with new and modified modules added regularly.  The benefit to an organisation like Shoprite is  that they can see which of their riders are taking this career seriously.  They’ve warmed to the idea that riders who complete modules get certain incentives in the form of vouchers. 

What Shoprite needs is a further series of modules that cover basic management skills.  And deals with things like applying for jobs etc. 

If South Africans know that there’s a possibility that they excel at their rider apprenticeship and complete the online courses with a pass mark then they could be permanently employed.  No one gets anything for free but a commitment by the rider to complete the course and quizzes is an indication that Shoprite may have a valuable employee down the line.

We have all of these courses in our Delivery Driver Training Course.  Simple 15 minute courses that become an internship over a 12 month period.

For more information contact us

The Lift Up Lab Foundation Workshop takes place on 15 November.

This is the second workshop we are hosting.  The one in Cape Town was very well attended.  We had a blast presenting it.  You're in for a treat at the Gauteng event because Rudolf Rautenbach is actually presenting this time, not MC'ing.  And our very good friend Howard Rybko, fresh from his business excursion in Nigeria, is also going to present.   You don't see Howard presenting often but it's worth it when you do.  Howard is the creator of BoardCloud. He has a wealth of experience in the NPO governance. 

There is always space for more people.

NPO Foundation Workshop Thursday 24 October 2024

The non-profit sector performs a vital role in the day to life of almost every mammal, fish, fowl or plant on this planet.  However it lives in a very precarious state, it needs donations to survive.  My colleague Rudolf Rautenbach along with his friend John Watson are a running a series of workshops on this sector.  Specifically with a view to looking at sustainability.  I am hoping that Schalk Cilliers of the ATKV can be part of this because the ATKV story is vital listening.   Not only is the ATKV a non-profit company, but its been in a tax paying position for years.  This has to the long term goal.

Register here

 

1-day Foundation Workshop with 5 experts

 

Has black economic empowerment run out of steam?

It might be more apt to say it has run out of road.  It’s obviously very topical because News24 invited five opinions on the subject.  Two of them (Gabriel Crause and Moletsi Mbeki) argue that it delivers nothing.  Duma Gqubule delivered his predictable diatribe about how much of the JSE is owned by black people.  His argument is repetitive and tiring.  He never looks beyond the determined shareholding of the various companies listed on the JSE.  I would imagine, and I think this is confirmed by his opinion piece, that his source of information is based on a sample of annual reports and BEE certificates.  This is a very poor method to actually determine any type of ownership.  He conveniently forgets about mandated investments like unit trusts and pension funds.  He also has not looked at the actual shareholders, in fairness this is a daunting task and cannot be done with any form of accuracy.  But if you are going to cast 5.8% aspersions then you need to make it absolutely clear how you came to this conclusion.  It’s flawed. I do, however agree with his conclusion that “we must rewrite the empowerment rules and bring an end to the voodoo system of accounting for black ownership.”  I never thought I would ever agree with him, I think he’s a bit of a hazbeen.

Predictably the black management forum concludes with “Instead of calling for the end of B-BBEE, the BBC advocates for the acceleration of its implementation in order to ensure that the majority play a meaningful role in the economy to safeguard our democracy.”  They also note that black people own 5% of the economy.  That is patently wrong and is probably only drawn from the same stats that Duma conjured up.

I think the most meaningful article was written by Lumkile Mondi.   In this article Professor Mondi puts forward a case that goes along the lines of “black man you are on your own”.  Instead of laying the blame in the usual places he distributes it between the economy and government policies.  I have to quote him

Nimrod Zalk in his doctoral thesis, titled "Things we lost in the FIRE [Finance, Insurance and Real Estate]", shows how the false promises by white business conglomerates to the Mandela government of black economic participation destroyed the industrial base of South Africa as they exited South Africa and how preferential procurement of HDSAs incentivised imports to the detriment of white-owned South African businesses destroying industrial capacity base and employment for many black workers.

It is the economic policy choices of the ANC and B-BBEE implementation that destroyed commuter rail services, road infrastructure, electricity supply, schools, libraries and many livelihoods as the economic growth slumped, employment collapsed, and poverty deepened.

The Covid-19 pandemic added to the misery. It is not surprising that many did not turn up at the polls on 29 May and those who voted supported other parties, resulting in the ANC losing its overwhelming majority in Parliament.

It was vote of no confidence on the policies of the ANC and their implementation. A vote for something new for a better life for all.

The whole article must be read.  It’s balanced and doesn’t throw stones unnecessarily.

This blog is full of discussions about how the implementation of BEE was left to those businesses that didn’t have enough ownership to not be compliant.  By setting the QSE threshold at R50m turnover in most codes they excluded a large number of black owned businesses from participating in the whole BEE process, something that the BEE strategy actively discourages.  This exclusion provided the leeway that some black-owned businesses needed to catapult themselves into the awarding of state contracts.  All it took was an affidavit and recently created company and off you went (in spite of the BEE codes wanting a bigger certificate for larger contracts).  We are however not alone.  There was a famous Covid PPE case in the UK which was a carbon copy of what our connected people are capable of doing.

PPE Medpro was one of the private companies awarded valuable contracts having been referred through this High Priority Lane by Baroness Michelle Mone. PPE Medpro was set up on (registered) 12 May 2020. It was awarded its first contract, worth £81 million, a month later on 12 June to supply 210 million face masks. The Department awarded a second contract a couple of weeks later on 26 June, worth £122 million for sterile surgical gowns.

The first codes were published in 2007, our good friend Rob Davies gave the initial codes no time to work and went about creating the new ones.  He knew that these revised codes were designed to allow black-owned businesses the necessary latitude to go about gaining government business almost exclusively.  His intention was to punish everybody else by setting targets and requirements that have now taken on the dimensions of an additional ANC tax.  Unfortunately for our bolshie, the clever lawyers in Bloem figured out a way to get around the ownership requirement using the modified flow through principle.  This was then closed off and was replaced by another type of ownership structure developed by the Pretoria Afrikaners.

Why have these get-arounds been so popular?  Simple, the cost of compliance is so high that companies will do anything to get those costs down.  For those whose turnover is over R50m, including black wholly-owned businesses, the problems (read costs) multiply.  Compliance is expensive.  No wonder skills development schemes started developing using tax breaks like the Employee Tax Incentive break.  It’s simply because companies could now comply and get a decent score.

I’m going to use a Duma-approved sensational figure.  The FirstRand Group’s staff cost during the 2023/4 year was R32,515,000,000.00 (I think this is R32bn).  If they want the 4 points you get for training unemployed people then that will cost them about R480m).  Where is the logic here?

I think our government should start having frank conversations with companies in South Africa.  Those companies that need to implement a full scorecard.  They should ask them whether this process is working.  Everyone of the large companies will say “We believe in transformation, we are proud of our BEE performance.”  They won’t tell you what they really think.  BEE compliance costs a fortune, whole departments have to be created to monitor and implement it.  It has created an industry.  Yes, it’s created employment, but it’s a major grudge purchase.  I have saved my clients amounts in the hundreds of millions of Rands over the last 20 years and they reluctantly pay me my meager fee.

Nothing – other than Duma going through your annual report and BEE reports concluding that you are untransformed.  His analyses have been quoted by anc politicians for years.  Because it’s a smoke screen.  It hides the fact that this government has stripped the country bare.  And on top of this they are an unequal partner in this process.  They have destroyed the education system.  You can’t employ people that the government has systematically neglected over the last 30 years.  And let’s not forget that the BEE codes are a legal requirement for government entities and departments.

Yes – BEE has failed and will continue to do so.  It’s a useful scapegoat for the government.  They won’t get rid of it and if they make it more stringent then I’ll figure out other ways to comply. 

Skills Development support for motorcycle delivery riders - press release for immediate release

The mushrooming motorcycle delivery business has changed our lives for the better. We are used to having people deliver almost everything that can be ordered online directly to our homes. As a consequence of this convenience the number of riders increases consistently with these motorcycles filling up our roads. The truth is that the barrier to entry in this industry is very low. There are no such requirements like a Professional driving permit (PrDP). All that is needed is a license and a serviceable motorbike. Nicknames like Kamikaze don’t do the brands that these motorcyclists represent any favour.
Without the formal training that public transport workers receive we cannot expect these riders to know all the aspects of their daily business activities. For instance, the might not understand the importance of customer service and time management as well as the management of their finances and how these tie into the maintenance of their motorcycles.
Recognising that these motorcyclists have embarked on a career of customer service in the guise of the delivery of goods, RISE BUSINESS CONTINUITY developed a programme that guides delivery drivers through all the aspects of their business. This goes from customer service to managing technology, basic motorcycle maintenance as well as basic business skills.
“The delivery service people are a vital part of our business and home lives.” Says RISE DIRECTOR Rudolf Rautenbach, “their industry is dynamic but the basics will always remain the same.” The RISE DELIVERY INTERNSHIP PROGRAMME aims to professionalise the industry. The course is delivered over a 12 month period in a series of videos that can be accessed at any time. Each month a new video is posted on our application. Once the programme is finished the rider will be given a certificate of completion.
“The programme is not specifically for the riders, although they benefit from it directly, it also has a distinct benefit for the retailer.” Says Rautenbach. “The motorcyclists are brand ambassadors, even if their vehicles are not branded by the retailer. If the rider’s bike is in a shabby state or they are rude to the customers this has a bearing on that brand.” To encourage the retailer’s support the retailer co-signs the final certificate.
“In some cases we’ve seen the retailer offer incentives for completion of the programme in the form of shopping or airtime vouchers.” Rautenbach observes. “It’s all about building a professional riding community.”
The gig economy has just arisen and it’s not had the time or the impetus to develop itself and look to become more professional. We feel that we are helping this process.”

Issued by RISE BUSINESS CONTINUITY. Mr Rautenbach can be contacted on 082 320 4067 or [email protected]

The curriculum is here. It's a first.  An online course that is sponsored by the company the rider rides for.  It doesn't cost much a month.  The key is that the rider gets a certificate that comes from RISE BUSINESS CONTINUITY and the sponsor.  If the sponsor wants BEE points for this, they will be added in at no charge.

 

 

 

What Neanderthals can tell us about graphite - introducing neanDNA (TM)

For those who don't know, the correct pronunciation is neanderTALL. 

Two articles have come to light.  The first one was written by Gabriel Crouse and was published in the Daily Maverick.  In the article Mr Crouse argues (not incorrectly) that the proposed 20,000 ill-qualified labour inspectors who will inspect, amongst other things, compliance with the Employment Equity Act.

Historical race inspectors?

[W]hat will these 20,000 people be asked to do? If a company says that its managers are all black, and an inspector comes along, by what standard will they check if that is true?

Comparing this to the apartheid method of race determination, Crause adds

“How will the inspectors know whether someone is telling the truth about their race?”

The answer is, they will not. There is no workable legal standard. The notion that any department can simply say “whatever your apartheid classification was, or would have been, that is what it is for us, too”, does not work, because in the apartheid system it was legally possible to reclassify – and thousands upon thousands of people did so.

I, ON THE OTHER HAND, HAVE A SOLUTION

Recent studies have found that homo sapiens did not wipe out Neanderthals, they in fact mated with them.   Scientists say that the genomes of most modern humans contain up to 4% Neanderthal DNA.  The same article notes

However, Neanderthals haven’t vanished completely. There could be one sitting in your chair right now, reading this article. Well, sort of. Many modern humans have some admixture of Neanderthal DNA, an indication that Homo sapiens and Homo neanderthalensis knew one another, also in the Biblical sense.

Neanderthal DNA is estimated to account for an average of 1% to 4% of the genomes of modern humans with ancestry outside sub-Saharan Africa. The share of Neanderthal DNA is highest among East Asians, intermediate among Europeans, and lowest in Southeast Asians.

Their genetic heritage is much smaller in sub-Saharan Africa: from none to 0.3%, depending on whom you ask. This indicates that the DNA exchange between both human species most likely occurred outside Africa, though there is some evidence of minimal remigration back into Africa: Ethiopians and other peoples in the Horn of Africa have around 1% Neanderthal-derived DNA.

If we follow this logic, then all African (most African) people in South Africa lack Neanderthal DNA.  To qualify this - most African people from Mali to the Cape Point have little or no Neanderthal DNA.

LAUNCHING neanDNA(TM) TEST KIT

This groundbreaking race inspection tool will assist all race inspectors to determine who is African and not African.  It comes in a portable backpack and all you need is a swab of saliva.  Put it into the test tube and you will detect the imposters within five minutes.

DISCLAIMER

The neanDNA Test kit will not be able to tell you whether the person is South African by birth.

Hurry - order yours today before the South African government depletes our stock of 20,004 kits.

 

 

There’s talk of fightback against Tau with his legal sector BEE code - Moneyweb article

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:

1. 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.
2. 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.
3. 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.
4. 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.
5. 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.
6. 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.