« October 2010 | Main | December 2010 »
This is a repost of one of my informative Caird Code Rules as per a reader's request. I've added in another little feature that I've never done before - if you place your mouse on the underlined text it will show the sections in the codes that I'm referring to.
Charities and other section 21 companies that are looking for SED money
Paragraph 5 of Code 000, statement 004 states very clearly that their BEE status is not a consideration in determining whether they will be beneficiaries of SED contributions
There are some NGOs/section 21s who provide certain types of services to corporates to raise money for their core activity. Under these circumstances they become a supplier to that corporate and might be required to produce a specialised enterprises BEE scorecard (statement 004).
Entities or companies providing enterprise development services
Now this is a very common occurrence. There are many private companies providing these services, Endeavor and Raizcorp are two that I know rather well. This practice is contemplated by code 600, paragraph 3.2.5.12. It does not appear that these companies actually need to produce a BEE scorecard to provide ED services. One of the exclusions under Code 500 (Preferential Procurement) is empowerment related procurement – more specifically (paragraph 6.5.2)
investments, loans or donations qualifying for recognition under any statement under Code series 600 or 700
This strongly suggests that that expenditure is excluded and hence a BEE scorecard is not needed.
Capping pay and bonuses for senior managers and executives earning more than R550 000 a year, restraining wage settlements for workers earning between R3 000 and R20 000 a month, a major rethink of black economic empowerment (BEE) and a “red-tape elimination campaign”.
As summed up by Ann Crotty in today's Business Report. Engineering News blared - "Patel’s growth plan calls for ‘major’ BEE overhaul" .
This is what Ebrahim had to say about BEE, you can download the whole document here (fast-forward to page 21)
Government has adopted the position that black economic empowerment (BEE) should seek to empower all historically disadvantaged people rather than only a small group of black investors. To this end, it adopted the Broad-Based BEE Act, which calls for expanded opportunities for workers and smaller enterprise as well as more representative ownership and management.
Current BEE provisions have, however, in many instances failed to ensure a broad-based approach, instead imposing significant costs on the economy without supporting employment creation or growth. The present BEE model remains excessively focused on transactions that involve existing assets and benefit a relatively small number of individuals. The New Growth Path requires a much stronger focus on the broad-based elements of the BEE regulations – ownership by communities and workers, increased skills development and career pathing for all working people, and support for small enterprise and co-ops – as well as a new emphasis on procurement from local producers in order to support employment creation.
The following shortcomings have emerged in the implementation of BEE.
- First, ownership and senior management issues receive disproportionate emphasis. The unintended consequences of this trend include “fronting”, speculation and tender abuse.
- Second, the regulations do not adequately incentivise employment creation, support for small enterprises and local procurement. The preferential procurement regulations aggravate this situation by privileging ownership over local production. (I think the issue is a little deeper than this Ebrahim, we have ridiculous labour laws and unions getting in the way here.)
- Finally, the broad-based BEE regulations penalise public entities as suppliers. The democratic state owns public entities on behalf of our people yet the regulations do not count them as “black empowered”. (Don't know what Ebrahim is on about here, these entities are owned by the people and should be ignored. Mind you, Ebrahim is a commie so it makes sense that he would push for more state entities.)
A major re-think is needed of the BEE framework and policy to achieve South Africa’s developmental and growth goals. The dti and EDD will work with the relevant government departments and the BBBEE Advisory Council to ensure:
- A substantial revision of the BBBEE Codes to do more to incentivise employment creation; investment in new productive capacity by black entrepreneurs, including small businesses and co-ops (using among others stronger local procurement); skills development and employment equity; collective and other forms of broad-based ownership; and sector strategies to create jobs.
- Consistent implementation of broad-based (instead of narrow) BEE in all sectors, with a systematic assessment of the effects on the cost of capital and investment.
This is a dramatic (I mean DRAMATIC) noise coming from a minister. Something that Rob should be talking about - not fronting. There have been utterings from the DTI and other black commentators that this is where we need to be heading. By focusing on the lower elements of the scorecard you reduce the possibility of fronting and offer a much better measure of success, like creating 5million jobs by 2020.
For a critical view of the New Growth Path you would do well to follow the links at the bottom of this report.
This document is an update of the property charter. Amend your notes
It was supposed to be a great moment in the history of empowerment, a milestone that was some seven years overdue. Alas they have done nothing but disappoint.
The venerated BEE council met last week, chaired by Rob. And all that came out of it was some babbling about fronting. Of all the articles written about this doleful topic, the best came from Kim Cloete who writes for Moneyweb. She writes
Minister of Trade and Industry Rob Davies, has charged that 75% of companies in the private sector are still not fully compliant with BEE, especially in the areas of enterprise and skills development. And he's particularly worried about "fronting", often used to acquire business from government departments and municipalities.
This is so safe. There are real issues with BEE that do involve a variety of things ranging from the skills deficit to the useless SETAs through to too few 100% black owned businesses. Think about it, so many companies struggle to find decent learnership programmes because their governing SETAs don't offer courses that they actually need and don't offer any constructive help in overcoming their problems (W&RSETA is a prime example).
And Rob chooses to talk about FRONTING.
What about the impact of the new companies act and King III (and numerous other acts) that provide really good reasons not to bring on more directors. These are real challenges.
And Rob chooses to talk about FRONTING!
I think I know why he's talking about this - let's go back to Kim (quoting Jenny Cargill, who is referring to government business)
"Ownership punches above its weight. You don't get in the door if you don't do black shareholding,"
She's right (here is my about face) - Rob really has no choice because Treasury (and rightly so in my book) is reluctant to move away from the current procurement regime. Hence if Rob wants to make a point that goes across all procurement within the country he has to focus on ownership.
In spite of this, and my sympathies are with Rob, the inept BEE Council is not looking at the real issues that South African businesses face. I don't believe they have the balls or the desire to do so. And fronting allows them to play the RACE CARD (which must be used in all circumstances.)
So we wait with bated breath for the next meeting to bark wildly away at more issues of FRONTING.
On the subject of SETA's I see that Blade has
recently signed a performance agreement with Mr Zuma to ensure SA produces 10000 artisans a year by 2014.
Good luck Lem, let us know how we can help you with this.
(If this post seems to be a lot like the Lefsetz Letter it is being done on purpose).
Perhaps that isn't quite true, BEE Matrix awarded it (when the hell are they going to fix up their website) - I just found the points. I was approached by Nic du Toit of Rand Management Services to help a client of his move from a level 4 to something higher.
This is normally really easy to do if the company is a QSE and this was no exception. My initial analysis was that they would be about a level 2 but alas with the bonus points under employment equity, Lintrans moved to a level 1. I told Frik Lindeque (after bribing him with a bottle of Fokol) that he should beg for a reduction to a level 2 - but unfortunately if the facts state that you are a level one then you are a level 1.
A few facts
Here are a couple of tips that can make use of when putting together your own QSE scorecard.
I find that with white owned companies we tend to leave out ownership, management and skills development. I normally exclude skills development because the requirements are too much of a burden for smaller businesses. And as a general rule all the training that happens is on-the-job and the codes are not keen on that. Also they tend not to have submitted a workplace skills plan, which means that they cannot claim any points under skills.
This is what you have left.
And that is how it went - maximum points for each element plus a bonus point under employment equity.
If you are looking for a reliable transport company why don't you consider Frik Lindeque and Lintrans, afterall they are a level one contributor.
Royal Bafokeng Holdings (RBH) might take a stake of as much as R10 billion in one of the country’s big banks over the next few years, chief executive Niall Carroll said yesterday.
“We would like to have a significant investment in financial services and it’s possibly a R5bn to R10bn stake in one of the big five financial services groups.
via www.iol.co.za
We all know that the banking BEE deals are heading towards fulfilment (ask ABSA - their score has suffered as a result). Of course FirstRand went off and re-financed their deal for another five years. But the rest have a few issues facing them. This is why they are hoping for a proper definition of the once empowered rule which will hopefully be contained in the new FSC.
Maybe this idea might be some bank's saving grace. Are they now queueing up to be chosen?
I do like this - but would prefer them to start their own bank.
If only it wasn't true. The Compensation Fund is part of the department of labour and they too have a vendor registration form.
This document is up there with the KZN DPW vendor form. The first thing that you notice is that they do not regard a verification certificate as worth anything because they insist that
Supporting documentation confirming the points scored regarding each element of the applicable scorecard, as used by the relevant verification agency. Applicable to all bidders submitting a valid verification certificate in terms of the BBBEE Codes of Good Practice.
What on earth is this? ABVAcuous, I would get onto this as soon as you can because they are effectively stating the VAs have no integrity in verifying.
Wait a minute, why are they worried about a BEE scorecard when all govt depts have to follow the PPPFA.
This gets better. Further on down the document they ask you to fill in each element in complete detail AGAIN!!!!
But no people, things improve even more. This is from the department of labour, that esteemed department that upholds our rights as workers or people who labour. One would think they have an understanding of the constitution and its accompanying legislation. But alas - they are about as clueless as the DMR. Take a look at this requirement (page 10)
If you are disabled, please submit an Affidavit from the Police confirming your disability and the nature.
Huh!!!
Firstly - can any third party confirm a disability.
Secondly - what does the SAPS know about judging disability. If anything (and I don't think this is legal anyway) it would have to be a medical specialist who can state this with any authority.
Thirdly - why does the DoL have an EEA1 form. And why don't they allow this form to be submitted?
What a total crock. And what a chronic embarrassment. Mildred - I hope you sort out this issue very soon. Your department is a joke and we have ample proof of this.
If you don't believe me - here it is.