What do you do when you receive an email written by a man of great stature and genius. So intimidating is his knowledge that I feel humbled to have been sent this email by a concerned third party. I have edited it a bit to protect the innocent.
From: Keith Levenstein
Subject: invalid BEE certificate
I have spoken to some of the other staff at your company about this invalid certificate.
COMPANY A is a transport company, and should have been assessed using the transport sector and associated sub-sector codes.
I am extremely concerned that verification agencies continue to issue certificates based on the codes that they have accreditation for, without due regard for the sector code that the client falls into. There is absolutely no discretion on the part of the measured entity, nor on the verification agency to use the wrong codes just because you have not yet received an extension of scope. You should have informed the measured entity of your inability to perform the requested verification.
The certificate is therefore invalid, and continued deliberate and public usage of that certificate by the measured entity will constitute deliberate misrepresentation of their BEE position.
Please ensure that you immediately withdraw that certificate by informing the measured entity and ensuring that they withdraw the certificate from their web site, and they inform all their clients who rely on that certificate. You should inform all verification agencies that if they come across this certificate it is invalid and cannot be used in the procurement calculation.
How can I, a mere mortal comment on this short piece of brilliance. If Mr Levenstein says this then we can be sure that he understands the law and is totally correct in making such a pronouncement - my goodness, this man is more than a genius, why he's a concerned citizen/good samaritan too.
So with this knowledge weighing heavily on me I will attempt to show that perhaps Mr Levenstein is just a tad misguided and a total ignoramus (as I have suggested on this blog before).
What exactly is the status of charters and when is a company compelled to follow them?
We have to look at the primary legislation here which is the B-BBEE Act. The Act actually clearly states when a code of good practice (as gazetted under section 9 (1)) must be considered. This is contained in section 10 of the Act.
10. Every organ of state and public entity must take into account and, as far as is reasonably possible, apply any relevant code of good practice issued in terms of this Act in—
(a) determining qualification criteria for the issuing of licences, concessions or other authorisations in terms of any law;
(b) developing and implementing a preferential procurement policy;
(c) determining qualification criteria for the sale of state-owned enterprises; and
(d) developing criteria for entering into partnerships with the private sector.
The two highlighted "entities" (for want of a better word) are defined in section 1 of the Act viz.
"organ of state" means—
(a) a national or provincial department as defined in the Public Finance Management Act, 1999 (Act No. 1 of 1999);
(b) a municipality as contemplated in the Constitution;
(c) Parliament;
(d) a provincial legislature; and
(e) a constitutional institution listed in Schedule 1 to the Public Finance Management Act, 1999 (Act No. 1 of 1999);
"public entity" means a public entity listed in Schedule 2 or 3 to the Public Finance Management Act, 1999 (Act No. 1 of 1999);
Seeing that the Act is silent about other entities that don't fall under this definition they MUST be excluded from section 10.
Now let's move onto the DTI"s generic codes. They've taken this one step further in code 000, statement 000, paragraph 3
3.1 The following entities are measurable under the Codes;
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.
A cursory reading of this would show that 3.1.4 makes it voluntary for those entities not doing business with an organ of state or any public entity. The voluntariness of BEE is not going to be discussed, it is now common cause that it is particularly difficult to do business without a BEE certificate.
Legally then, if you are not doing business with those two entities then you can produce a BEE scorecard using any code (although I would recommend you use the DTI's generic codes as your default one) and a company should have no reason to reject it.
BUT HOLD ON - WHY DOES THE TRANSPORT SECTOR CODE SAY....
...the TRANSPORT SUB-SECTOR CODES are binding on all stakeholders operating in the TRANSPORT Sector within which the Sub-Sector Codes apply.
This is because it applies to section 10 of the Act.
WHAT THEN TO DO?
It doesn't take a great deal of forethought or insight to come to this conclusion so I think Mr Levenstein was talking a little but out of turn. So out of turn that I can't but not ask the question "who the hell does he think he is, and what legal right does he have to send such devoid-of-fact emails?"
My recommendation to the verification agency concerned is that they send him a very stern letter of a legal nature requesting him to retract this email and issue a public apology. I would even consider some other form of legal action because this email has certainly placed a question mark on that verification agency's integrity.
As far as the client is concerned - this email has also placed a fair amount of doubt about their own commitment to BEE. There would have to be commercial considerations to this.
I would NOT retract the verification certificate as Mr Levenstein was insistent that they do, and if Mr Levenstein is aggrieved or affronted he too may make use of a competent legal practitioner and perhaps a court date.
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