Paul Janisch

If it ain't black don't nix it

Sometimes, late at night, it is very difficult to come up with an interesting title.  So this one will have to do.

I have been doing a little research on the Mining Charter.  The first thing you notice about it is its title " Broad-Based Socio-Economic Empowerment Charter for the South African Mining Industry". It's the Broad-based SOCIO-economic etc.  Very different to B-BBEE, in fact this charter pre-dates the B-BBEE Act by a year.  It is therefore not surprising that the charter does not mention the B-BBEE Act.

As we all know this charter is not a charter, it forms part of the Mineral and Petroleum Resources Development Act.  This means that in if you are desirous in complying with the Act then you have to follow the charter.  I'm not going to go through the charter but I do want to talk about this term - historically disadvantaged person, or historically disadvantaged South African or historically disadvantaged individual; or as they are known as in acronym form  - HDP (not very common), HDSA or HDI.

I remember meeting Kevin a few years ago and speaking about a certain Ivy regulation that required 50% black ownership.  Kevin gave me that knowing look and followed it with the words "HDSA - historically disadvantaged South African".  What Kevin was saying to me was that the term HDSA incorporates white women and white disabled people.  This is what I want to throw out to you.  What is the accepted understanding of the term HDI, HDSA as it refers to the Mining Charter?

The Minerals Act defines HDP as "any person, category of persons or community, disadvantaged by unfair discrimination before the Constitution took effect".  The first thing you'll notice is the use of the word "person".  This is a very broad term, it could include any person who was discriminated against at the time.  It could include any person from any other country in the world.  And then there is the term  "disadvantaged by unfair discrimination".  What exactly does this mean? For sure it means much more than not having the franchise.  Could I as a white male claim that I was discriminated against because I was conscripted? 

We have to look to legislation to dig deeper.  One of the first remedial acts was the Employment Equity Act which stated 

To provide for employment equity; and to provide for matters incidental thereto.
Recognising-

• that as a result of apartheid and other discriminatory laws and practices,there are disparities in employment, occupation and income within the national labour market; and
• that those disparities create such pronounced disadvantages for certain categories of people that they cannot be redressed simply by repealing discriminatory laws

The act then went on to define designated groups as "black people, women and people with disabilities".  Just to be clear, the terms women and people with disabilities refer to all people who fulfill those criteria irrespective of race or nationality.

The most important point here is that the EE Act recognised that all women had suffered discrimination.  The Act was promulgated in 1998 - at least four years earlier than the Minerals Act. 

The next act to look at is the Competition Act, which was promulgated after the EE Act.  The purpose of this act is, inter alia,

promote and maintain competition in the Republic in order to promote a greater spread of ownership, in particular to increase the ownership stakes of historically disadvantaged persons (section 2f)

It has been amended a few times since and has yet to actually define what  "historically disadvantaged persons" actually means.  Which leads me to conclude that that definition exists elsewhere - exactly where I'd love to know.

Now onto the legendary PPPFA.  Well not the act itself but its 2001 regulations that  use the term HDI and define it as

(h) “Historically Disadvantaged Individual (HDI)” means a South African citizen –
(1)  who, due to the apartheid policy that had been in place, had no franchise in national elections prior to the introduction of the Constitution of the Republic of South Africa,1983 (Act No 110 of 1983) or the Constitution of the Republic of South Africa,1993 (Act No 200 of 1993) (“the Interim Constitution”); and / or
(2)  who is a female; and / or
(3)  who has a disability:

Individual  incorporates South African citizen.  These are the 2001 regulations and like the EE Act they are very clear that white women and disabled people are included.

Now we come to the Minerals Act

The objects of this Act are to substantially and meaningfully expand opportunities for historically disadvantaged persons, including women, to enter the mineral and petroleum industries and to benefit from the exploitation of the nation's mineral and petroleum resources (section 2(d)

The definition of HDP in the Act does not expressly include women, but the intention is to include all women. 

Where does this leave us?  My conclusion is that if the EE Act recognises that a "designated group" includes all women and it is designed to remedy the discrimination these designated groups suffered in the past; then white women must fit in the definition of HDP as defined in the Minerals Act.   (It must be noted that the term designated groups was updated in a later EE code of good practice uses the B-BBEE codes' definition of black  people for designated people - but I don't think that that is pertinent to the Minerals Act).

That's my opinion - I would really appreciate any other opinion in the comments section below.

BEE is an art not a science

I'm not sure if I was the first to coin the title but I have said it often.  The codes are so vague that you can be relatively comfortable that you can persuade almost anyone that your opinion is correct.

But that's not the subject of today's lesson.  I thought I'd do a little self promotion and go over some of the things I did in my professional capacity last year.

Got Google Reader and went wild with Google Alerts

Now that almost every site provides you with a RSS feed all you need is a reader to collect these feeds.   I know that there are a bunch of them out there but I chose Google Reader.  I now get everything sent to my desktop as and when the news breaks.  Strangely enough the Business Day doesn't provide RSS feeds.  Add Google alerts to that and you are on top of it all. 

Fought with ABVA

Actually it was more of  a battle with Theo "my buddy" Lombard.  I don't know if I won that battle but Theo did resign.  I was really shocked at  his speech at the ABVA breakfast - sure BEE is an art and and not a science, but I was not convinced that what Theo was alleging was supported in the codes or the R-47 document.

Went on a tour with the ATKV

I went on country-wide tour with Wim de Wet of the ATKV.  We went to all the resorts that the ATKV owns and spoke to their suppliers.  I got on famously with Wim and I was overwhelmed by the facilities and the hospitality.  I discovered what the word "kuier" actually means and what happens when you get down to "lekker kuier".  The latter was learned at Goudini-Spa where we celebrated Wim's appointment as resort manager of ATKV-Klein-Kariba.  All I am willing to say about that experience is that certain people at that event proudly declared that "die Engelsman het gaan slaap".  Lekker kuier is something to be feared!!!!!!!!!!!

Spoke at numerous conferences

I still like talking at conferences.  I relish every opportunity.  I spoke on subjects ranging from enterprise development to triple bottom line reporting and BEE. I was also asked to chair a two conference on intellectual property which I thoroughly enjoyed.  Reminds me of the old Zappa song.

Wrote the Nedbank codes handbook

I don't know if I have mentioned this but every time I get all screwed up about BEE, transformation and related subjects I go and plonk myself in front of Sakkie O'Neil.  Sakkie is without doubt, the most respected transformation expert within the financial sector - this is the whole financial sector, not just the banks.  I have told him that he needs to speak at transformation conferences, BEE conferences - any conference.   He speaks with conviction and has a genuine desire to see Nedbank leading the financial sector in its transformation - and I think he'll get it right.

Anyway Sakkie asked to write a user's guide to the codes which I did.  There are a lot of copies floating around Nedbank, I'm sure they won't mind if you take one.  Sakkie very generously credited me as the author too.

Wrote the Financial Sector Charter annual report

This was one hell of a learning curve.  Marisa and I were asked to write the annual report, which we wrote in conjunction with Leila Moonda of BEESA.  I came into this very cold - Marisa is the expert on the FSC so I had to learn things very quickly.  I was really lucky to have worked with the very patient Busi Dlamini who is the COO of the FSC Council.  Not only did Busi help me with the data and the concepts she also proved to be a brilliant editor and writer in the places where I wasn't.  Thanks Busi. 

And thanks must also go to Andrew and his team from B1SA, they were the ones collecting all the information.  If you haven't seen the publication you can get it here. 

I got to work for the most amazing clients

I know this is a cliché but I have been very fortunate.  People like Johan Gericke from File Hire Plant, Sakkie O'Neil, Trevor Karshagen from Fry's Metals, Mark Ferguson (and Cindy) from SA Mercantile (to name only a few) have made my job worthwhile.  

I rubbed noses with the best BEE and related brains in the country

I get together with Kevin Lester and Louise Paulsen often.  Louise is the IDC's BEE asset and she is one of the few women in this largely white-male dominated industry.  I value Louise's opinion and expertise and abuse it whenever I can.  I don't think there's much more I can say about Kevin, but I really feel good when he agrees with some of my wilder interpretations of the codes.

Marisa is not the kind of person who happily calls herself a BEE expert - so I'll do that for her.  She is not only supremely versed in the codes but she leaves most people in the financial sector behind with her practical knowledge of the FSC.  I've done a lot of work for and with Marisa, and I plan to do one hell of a lot more this year.

I mentioned Sakkie earlier.  It's worth your while to meet with him.

Obed de Swardt of BEE-Matrix is my sounding board.  I have learned that whatever I do I have to make sure that a verification agency will back me up.  We argue and disagree often, but I absolutely respect his opinion and integrity.  I do not hesitate to recommend him and BEE-Matrix.  This is a company to watch - NERA might be the big corporate's verification agency of choice for now; they are already receiving a fair run from Obed's team.

Alon Raiz of Raizcorp is doing some of the most innovative enterprise development work.   If you have money to invest in an ED project, Raizcorp comes highly recommended.  I have done a lot of work with Greg Durst of Endeavor and they too have started an enterprise development project.  Greg is moving on from Endeavor - I'll update his details on the blog when he takes up his new position.

Two thousand and whine

  Happy new year.  There is little doubt that last year was a little bit on the hellish side although it did improve a lot in the last few months (I have to thank Marisa for that).

I'm not up for too much of a dissection of last year, but I do need to say that the chickens did return when most BEE deals ended up looking a little worse for wear, or to quote Nomkhita Nqweni "black economic empowerment transactions, most of them vendor-financed, face serious challenges".  No shit Sheerluck. 

It had to happen - our economy was booming along like the proverbial red-faced bass drummer in a marching band and there was no way anyone was going to purchase shares outright - the dividends would cover that.  Then there was a suggestion that perhaps the government should bail them out.  It was at this point that my old mate jungle jim and Iactually  agreed on something.

Jimmy Manyi, the president of the Black Management Forum (BMF), on Friday spurned the possible government financial bailout of black economic empowerment (BEE) companies whose deals were underwater, saying those who had benefited from such "equity deals" would have to help themselves out of trouble.

Now for 2009.

I can't say that things are going to look much different this year. 

• The Financial Sector Charter will be gazetted under section 9 because there is too much invested in it to allow it to disappear.
• The codes will not be changed in spite of the noises from the ANC.  We've only just got used to the codes, and even I have to admit that they are not as bad as I initially thought they would be, even if they were designed for a boom economy - red-faced drumming anyone?
• There will be a plethora of industry charters gazetted under section 12 and 9.3.  Good luck to them, they stand very little chance of making it to section 9.  Some consultants will make a tidy little sum out of their drafting.
• BEE scorecards will still be a tick-box requirement.  On this point I think that it must be stated that only under very extreme circumstances does the actual score enhance a company's chances of getting business.  I have dealt with all sorts of companies over the last five years and very few of them (if any) have actually lost business because of their score.  They have struggled to get new business because they don't have a scorecard.  So don't believe certain ill-informed BEE "experts" who declare that a better score will get you more business.
• The PPPFA and B-BBEE - no change.  I spoke to Kevin Lester about this and his recommendation is that they run in parallel.  Alignment is almost impossible under our constitution.
• Verification agencies and accreditation.  Ho hum.  Can't see it happening before the elections.  On this subject if you haven't gone on Kevin's verification manual course please do yourself a favour and attend the next one. 
• Government and BEE.  Going nowhere slowly - or should I quote Messrs Lennon and McCartney "You and me Sunday driving, Not arriving........."

And what else

• The end of entitlement.  Deals are not going to be as prevalent as they were in the past.  The wanna-be usual suspects are going to have to learn to work for their money.  I know that MTN has announced a major deal, I suspect this will be the exception this year.  As it is the ANC seems to want to see more happening at the bottom end of the economy.  I don't know if I wrote about a certain young man who walked into a large company in Sandton and insisted that he be included in their pending deal.  The person who told me the story was shocked at the patent greed and sense of entitlement.  To the best on my knowledge he didn't cut it.
• Last year will be the last year of good BEE scores.  The codes are going to show their true mettle this year when budgets and allocations are slashed - this is one thing that the codes need to look at. 
• BEE consultants worth their salt will need to assist companies in maintaining their BEE status by reducing their expenditure - it can be done you know.
• And Empowerdex is going to lose its market share to NERA.  Already I have noticed that the larger corporates are using NERA more and more. 

Keep your heads down and good luck for this year.