This thing is now doing the rounds and freaking everyone out. At first I thought it was a joke - the original source that it came from is spectacularly dubious. So I started trawling the internet to see whether the minister of trade and industry did actually publish it. To my shock and horror he did. I must have looked at for an hour trying to figure out what the hell it means.
To the casual observer it seems to say that from the 1st of August (this year) onwards only verification certificates from SANAS-accredited agencies or agencies that have a valid pre-assessment letter from SANAS will be regarded as valid.
I carried on looking at this thing because it doesn't make sense, I cannot understand how the minister can prescribe the measurement of a system that is not compulsory in South African private business practice. And then again we have section 10 of code 000 that says verification is "encouraged". That's the first issue and I'll come back to this a little later.
The next issue is the applicability of scorecards between the period of 9 April and 1 August.
Paragraph B says that non-accredited agency certificates issued before the 9th of April will be valid for 12 months from the date of issue (do you want to see how many certificates are going to be backdated to 8 April)
OK - what happens in the 3 and a half months between 9 April and 1 August. What is then regarded as a valid certificate and who can issue one? If I read this properly it suggests to me that only accredited agency certificates will be valid during this period. That in the words of my old korporaal is " 'n totaal fokop".
Back to point one.
What is valid, or more precisely what does the word valid mean?
The answer lies in the context within which the minister gazetted this notice. He did this under section 14 of the B-BBEE act, which says
14. The Minister may make regulations with regard to any matter that it is necessary to prescribe in order to ensure the proper implementation of this Act.
Therefore the word "valid" must apply to the act and then must be applicable to those entities that are subject to the act. The codes tell us in code 000, statement 000, paragraph 3 who has to follow them
3.1.1 all public entities listed in schedule 2 or schedule 3 (Parts A and C) of the Public Finance Management Act;
3.1.2 any public entity listed in schedule 3 (Parts B and D) which are trading entities which undertake any business with any organ of state, public entity or any other Enterprise;
and
3.1.3 any enterprise that undertakes any business with any organ of state or public entity:
3.1.4 any other enterprise that undertakes any business, whether director indirect, with any entity that is subject to measurement under paragraph 3.1.1 to 3.1.3 and which is seeking to establish its own B-BBEE compliance.
I think this is relatively self-explanatory but I should discuss paragraph 3.1.4. Here they suggest that almost every entity in the country is subject to the codes BUT only if they seek to establish their own B-BBEE compliance. This makes it voluntary for everyone else.
It stands to reason that this notice (354 of 2009) is only applicable to those entities described in 3.1.1 to 3.1.3. And here lies the biggest rub of all - until the PPPFA and the B-BBEE act are actually able to communicate with each other, a BEE certificate is not a consideration in government procurement at all.
Is the minister acting ultra-vires?
To my mind the minister is well within his rights and powers to publish this, but I have a (more persuasive and comprehensive) opinion from a lawyer who argues that the whole thing is without any legal grounding.
I do speak under correction and I am referring to an opinion piece that was written by Kevin Lester and Safiyya Patel, but I think it has something to do with the Promotion of Administrative Justice Act, 2000 specifically section 3 which states
1) Administrative action which materially and adversely affects the rights or legitimate expectations of any person must be procedurally fair.
This notice has a huge impact on the private business sector and they should have been given adequate notice.
What is going to happen now?
- I predict that corporates will interpret this broadly and start making even more ridiculous demands on their suppliers, demands that the verification agencies themselves are incapable of meeting.
- The DTI's BEE IT portal might be rendered obsolete because it provides for a self-verification facility.
What should we be doing?
Corporate purchasing departments must keep a calm head on this one. Suppliers are already scared shitless by this BEE stuff - by incorporating this notice into procurement practices (and we've seen what happens when a company decides to seriously mess with interpretations).
A little legal challenge
Perhaps the time has come to query numerous things that the DTI has done over the last year or so. I have heard that they are anticipating a legal battle, although I am almost dead sure that this is the last thing they would want because if they lose then the Verification Manual gets bombed, this notice gets bombed and they find themselves in a huge pickle. Also the minister appears to be acting in the most aribitrary way and this needs to be checked. Perhaps some interested party might be interested in taking up this cause what with elections around the corner....................
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