Paul Janisch

Ayigobi hopes to stay within the fold of ArcelorMittal SA - Business News - IOL | Breaking News | South Africa News | World News | Sport | Business | Entertainment | IOL.co.za

The Ayigobi consortium hoped to remain the black economic empowerment (BEE) partner of ArcelorMittal South Africa, despite a setback in the steel maker’s relations with key consortium members, the consortium said yesterday.

“As Ayigobi we remain very keen to partner with ArcelorMittal SA,” said its leader Sandile Zungu.

Zungu was speaking after another twist in ArcelorMittal SA’s long-running pricing dispute with Kumba Iron Ore, this time a joinder application by the steel maker in which it has taken sides with arch-rival Kumba Iron Ore by asking the North Gauteng High Court to set aside a 21.4 percent prospecting right at Sishen granted to Imperial Crown Trading (ICT).

via www.iol.co.za

Please no. Not this fucking embarrassment. Zungu has leached enough off the economy. Choose someone more deserving.

BusinessDay - New state procurement regulations to be announced

New regulations would be issued by the accountant general in the next 24 hours which would make the tender process by national and provincial governments more transparent and more tightly controlled, Finance Minister Pravin Gordhan announced this morning.

The measures are aimed at tightening up supply chain management and the "severe" allegations of corruption in state procurement.

In terms of the new rules national and provincial departments will have to submit advance tender programmes for all contracts over R500 000 to national and provincial treasuries.

The names of all bidders will have to be published on departmental websites and bidders will have to disclose the names of directors and shareholders so that checks can be conducted on whether they are in the service of the state and whether they are on the list of prohibited government service providers.

Furthermore, Mr Gordhan said the details of successful bids would also have to be published including the contract prices and minimum preferences applied.

Treasuries would monitor the performance of the contracts.

Finally limits would be placed on variations of contracts once they are in force.

via www.businessday.co.za

The DTI and various other departments and people who know say that the PPPFA regulations have been accepted by parliament. Perhaps these regulations will be published as well.

Take a look at the quote about R500k - this is currently the maximum bid for the 80/20 rule. The draft regulations spoke of upping that to R1m.

Land reform and determining the racial breakdown of land ownership

Eddie Mohoebi, spokesperson for the Department of Land Affairs, previously pointed out in an article in the Mail & Guardian that determining land ownership along racial lines is problematic as the Constitution does not allow for any breakdown of land ownership along racial lines. Information or records along racial lines are not available in the Deeds Registry. A racial determination of land ownership by companies is also impossible as shares constantly changes hands.

via www.leadershiponline.co.za

Taken from Leadership Magazine's weekly newsletter which is a must to subscribe to.

This same issue comes up in verification, the JSE black board, employment equity etc.

An overdue comment on entrepreneurship

Many years ago when I was at university I used to wonder why the cleverest people in my class at school could study anything other than medicine.  To my mind if you were that clever then you might as well do a course that required cleverness - like medicine.  

This same sentiment occurs within South Africa, here we don't understand why black people bother with getting a job when there was so much opportunity for them to start their own business.  An article in the FM, written by Willie Thabe who  is MD of the Black Management Forum Investments Company, puts this whole concept into persepctive.

global statistics tell us that only 5% of all people — black or white — are entrepreneurs at heart.
Empirical evidence from development finance institutions such as the IDC and Khula Finance suggests the failure rates of investee companies are high in spite of the fact that their core mandate is developmental. It’s a well-known fact that 66% of startups survive the first two years of business and only 44% the next two.

He then poses the relevant but politically thorny question

The moral of the story: new businesses carry a level of risk. So what is the economic benefit to a local business of developing a second enterprise purely for a good BEE score?

And he concludes with

we can’t ignore the fact that the type of entrepreneur that emanates from the provisions of BEE policy may qualify for the opportunity due to previous economic displacement but may not have the appropriate background or savvy to operate a successful enterprise despite its size.
Therefore it makes no difference where the BEE emphasis lies. The lack of a strong entrepreneurial culture is the fundamental problem. Government’s expectation of the private sector succeeding where developmental institutions have not makes the new move untenable in practical terms. For corporates and individuals to be bullied by government into a development mind-set can’t possibly be the way to broad-based economic success.

 This is very hard-hitting and relevant.  And again harks me back to the absolute lack of decent entrepreneurial talent on the BEE council.  The same problems are going to continue until the DTI and ZumachineGat actually figure this out.

Well written Willie.

Namibian mining from Tim Cohen

Namibia, has also started on the nationalisation course, causing a number of mining stocks on the Australian stock exchange to tank, and showing how contagious bad policy can be.

via www.businessday.co.za

Why they don't learn from each other I don't know.  Cohen colours an interesting picture about Zim and how Morgan and his crowd might not be as angellic as they would like us to believe.

Huh? What the hell does this mean? ESKOM content - not for the faint hearted or those who appreciate logic in their communications

An inarticulate notice was sent by Eskom to their "valued suppliers".  It's got something to do with the codes and ESKADAAT and BWO and body odour and might be a subliminal message to encourage people to vote for the ANC (you know the party that promises you power and then ................... loadshedding and corruption etc).  

This is the significant passage.

With the Broad-Based Black Economic Empowerment being implemented, there was a need for Eskom to amend their BEE and procurement policies in order to align with the legislative requirements of these codes. Specific requirements and guidelines with regard to the application of the Codes within Eskom have been approved in 2008/2009. (Eskom Standard, 32-417). An amendment to the aforementioned policy has been instituted and signed off in March 2011 to align with the ownership element as documented within the Codes of Good Practice.  The Codes of Good Practice recognises a BWO enterprise with a minimum ownership of 30% for reporting on procurement expenditure, whereas Eskom insists on a 50+1% ownership, as per legislative requirements. Enterprises with 30% black women ownership are classified as black-women empowered enterprises.

 Eskom has realised their oversight with regard to the BWO/BO status and this must be amended. 

Up to this point I think I understand this

A grace period up to the 31 August 2011 is therefore given to all existing suppliers to adhere to the Codes of Good Practice as mentioned above. After the grace period has lapsed, those who have not  complied will automatically forfeit the BWO/BO status, with no exceptions being made

But I don't understand this.  What are the unenlightened ones referring to?  Complied with a 50% level or a 30% level.  Are they saying that if you comply with the 50% you don't qualify because they want 30%?

 

 

 

Fancy yourself as a company director? Huge significance for BEE scorecards

No this is not my own work.  It was written by Micel Schnehage and posted on Moneyweb's site.  But I have edited it liberally and highlighted all the things that can happen to delinquent directors.  Also note the (non-comprehensive) list of acts that carry consequences.  I have also made it a little dramatic - please read the original article (link below).

JOHANNESBURG – The new Companies Act, which came into effect on May 1 2011, has imposed strict conditions on company directors with some facing the possibility of being declared delinquent.

Eric Levenstein, a director with Werksmans Attorneys, says company directors can be declared delinquent should they grossly abuse their position or inflict harm upon a company or a subsidiary of a company.  This can also be implemented if a director has acted in a manner that amounts to gross negligence, wilful misconduct or breach of trust in relation to the performance of such director’s duties.

This will also apply if a director gains advantage for her or himself, or for another person other than the company or a wholly owned subsidiary of the company, or knowingly causes harm to the company or any of its subsidiaries. Levenstein says any organ of state responsible for the administration of any legislation may apply to court for an order declaring a director delinquent. 

The courts will be obliged to declare a person to be a delinquent director if the person consented to taking up the position while ineligible or disqualified. In terms of the Act a person can be disqualified if found to be an unrehabilitated insolvent or has been removed from an office of trust on the grounds of misconduct involving dishonesty. If you have been convicted of fraud, theft or forgery or any conduct involving fraud, misrepresentation or dishonesty, you could also face the chop. You can also face the music if you flout statutes like the Insolvency Act, the Close Corporation Act, the Competition Act, the Financial Intelligence Centre Act, the Securities Act or the Prevention and Combating of Corrupt Activities Act.

A declaration of delinquency will be enforced for the lifetime of the person involved. A court may also decide to place a person under probation, which is similar to a suspended sentence. Levenstein says furthermore, the word “delinquency” carries criminal connotations as various dictionaries refer to it as being an offender, guilty of a crime or misdeed and/or a person guilty of serious antisocial or criminal conduct.

via www.moneyweb.co.za

We've known for a while that there are very definite risks involved with being a director.  A few other risks were listed by Willie Coetzee a few years ago

• the VAT Act which provides that directors who are regularly involved in the financial affairs of the company can be held personally liable for VAT penalties and interest payable by the company;
• the National Environmental Management Act which deems a director to be guilty of the same offence as the company in the event of pollution or degradation of the environment, unless the director can show that he took all reasonable steps to prevent the harm;
• the proposed amendments to the Competition Act (which have been signed by the President but are not in force - they might be, this article was written in July, 2009) which seek to hold liable directors who are aware of or fail to prevent prohibited practice

And the criticism persists at the number of black directors.  There needs to be more maturity from the DTI on this issue - the risks are very real and simply appointing a person to a board because of the colour of their skin is a huge problem.  

Actually coming to think of it - this must have a positive impact on the quality of directors, both black and otherwise.

Massmart-Walmart Competition Tribunal hearing day one (9 May 2011)

“Ultimately, Massmart’s procurement philosophy is driven by consumer choice. Massmart procures products from suppliers because consumers buy those products from Massmart,” his witness statement read.

“Other than for the purposes of diversity of supply and BBBEE (Broad-based Black Economic Empowerment) considerations, it is irrelevant to Massmart whether a particular product is locally manufactured, locally assembled with all or some foreign components or fully imported.”

He said although Massmart attempted to procure its products as cheaply as possible, its business was “premised on the assumption that all of Massmart’s major competitors are able to procure goods from suppliers at substantially similar prices”.

“As the acquisition of Massmart by Walmart will not have a material impact on these fundamental economic determinants, the basic procurement patterns currently seen within the Massmart business are unlikely to be changed significantly by the proposed transaction.

via www.iol.co.za

Grant Pattison makes a few very important points here

1. The consumer is not concerned about the BEE performance of Massmart or any of its suppliers.  And this applies to all other similar-type companies (Woolworths, Spar, Checkers, Pick 'n Pay etc).  
2. Massmart (and by implication all of its competitors) are also not concerned about the percentage of local content.  The issue here is competitiveness and price.
3. Why would this change when Walmart becomes the major shareholder?

Well put Grant.  

Zimbabwe defends BEE plan (we come in pieces)

Mujuru defends BEE plan

 

(Zimbabwe) Vice-president Joyce Mujuru is in a last-minute bid to sell the controversial Indigenisation Act that threatens to take away majority ownership of foreign-owned properties. 

Mujuru addressed delegates at the Business Conference of the just-ended Zimbabwe International Trade Fair, reassuring them that the government was flexible and willing to take suggestions on the act.

"Concern has been raised on our indigenisation and economic empowerment programme. There has been focus on the distribution rather than on new investments," she said in her address.

"Our thrust is not unique to Zimbabwe but is common throughout the world, including our neighboring states," she said.

 Bullshit Joyce, yours is completely unique - admit it you have no clue when it comes to anything (and I stress ANYTHING).  You expect anyone to take you and Bob seriously after you stole huge tracts of land from their legal owners without compensation.  

Concern so far centres on threats by some elements within Zanu-PF to grab foreign-owned companies in a fashion reminiscent of the chaotic land reform programme.

However, Mujuru denied that the Indigenisation Act was a special Zanu-PF project.
"Every Zimbabwean has to benefit from the act," she said.

via www.timeslive.co.za

As John Lennon once said in a Hard Day's Night "A likely story".  

Got to love this as well

A big fear for foreign investors is that there is no security in Zimbabwe, since the government often changes its standpoint when it comes to foreigners and their investments.
However, Mujuru tried to assure investors.
"The government of Zimbabwe welcomes investors and assures them that their investment is safe in Zimbabwe. There are laws that safeguard and protect private property and these will continue to be respected," said Mujuru.

This is like ZumachineGat telling the South African public that the Guptas are just casual acquaintances.

Re: Namibia and mining and nationalisation - Dr. Okey Iheduru article

I was asked by the author of the article that I quoted in this last post to credit him for using his work.  The article came via Google alerts and was found on a Business Day website (not the South African Business Day, but a Nigerian one - although the mastheads on both are quite similar).   I explained to Dr Iheduru that I use Blog It, which is a Typepad app that allows me to highlight tracts from a web page and then post them directly to my blog.  The text that I post is indented and then credited underneath - it says "via etc etc", and is linked to the original source.  I then comment below this.

I was at pains to stress that I in no way ever purport this highlighted work to be my own - I use Blog It because it is so much quicker for me to post something on the fly.   I believe that I have cleared this up with Dr Iheduru and hope to quote from any of his other work that I happen across on my daily internet excursions.