Paul Janisch

Corporate dissent and raising money to fight the government

Unless a CEO is prepared to go on the record, his or her message should perhaps simply not be recorded or, at least, little value should be placed on it. Perhaps we should treat corporate South Africa's armies of spin-doctors with more caution. I know it is hard for executives to "take on" a minister, but there are countless ways it can be done productively.

These executives are failing in the most fundamental way. They are failing to protect their shareholders. They may think that by kissing the government boot they are keeping the wolf from the door, but they are not. They should learn to speak up; to have the courage of their convictions. It isn't necessary to shout. But to speak or write in measured terms of their industry, or legislation that might affect it, means we might begin to have something approaching an authentic conversation about the future of our economy. Gordhan was right. It isn't his fault when companies pay homage to policies they profoundly disagree with.

So said Peter Bruce in this week's Thick End of the Wedge column. He's completely right. There is an innate fear of government reprisals for any form of dissent. Ask Reuel Khoza about what happened to him when he apparently uttered something like "South Africa's strange breed of leaders is a threat to democracy." I think Mr Khoza managed to rise above this and gained an incredible amount of respect from a variety of quarters as a result.

Here I am raising money for a court case against the minister of trade and industry. A court case that would have huge implications for corporates. These implications range from the sheer cost of implementing what the dti wants to sending a message to the government that they many not operate beyond their constitutional mandate (which Rob has most definitely done). Thus far I have not had doors slammed on me but I have fairly good idea that listed corporates would not be that keen to support it. As someone said to me last week, no listed company would go for this because the donation would be reflected in their annual report. All it takes is one shareholder to question the contribution and then be accused of being anti-transformation. I think their fear is justified because of the sensitivity of transformation and race. The fact remains that anyone who supports this action is defending the constitution and preventing the government from barrelling our constitutional rights.

I then turned my attention to those minority groups that will be dramatically effected by the management and skills development codes. The two tables below show the contributions that Coloureds and Indians make to both those elements. Both tables draw the stats from the latest EE Commission Annual Report.

Management/EE

This is simple enough. The 1.69 points are the maximum number of points that Africans will contribute to any measurement under senior to junior management. The total number of points is 2. You have to ask yourself the question why any self-respecting company would be interested in hiring Coloureds or Indians if the maximum number of points that they can be awarded is just on 0.3 points. This will barely make a difference to the overall score. Dispense with them and focus on Africans (right now a generic term – but who knows when it is going to be broken down into a tribal EAP).

	Male EAP	Female EAP	TOTAL	Black points' contribution	Black female points' contribution
African	40.70%	34.20%	74.90%	1.69	0.85
Coloured	5.80%	5.00%	10.80%	0.24	0.12
Indian	1.90%	1.10%	3.00%	0.07	0.03

Skills Development

This is a more alarming measurement category. If you have 6% of payroll to spend on training (which you now have under the revised codes) then you are required to spend over 5% on the training of Africans.

	Male EAP	Black points' contribution	Female EAP	Black female points' contribution
African	40.70%	2.75	34.20%	2.31
Coloured	5.80%	0.39	5.00%	0.34
Indian	1.90%	0.13	1.10%	0.07

Let's assume that your target spend amount is R600. This is what you would spend on each race group

African Male	R275
African Female	R231
Coloured Male	R39
Coloured Female	R34
Indian Male	R13
Indian Female	R7

In case you were wondering whether the R7 is a typo, it's not, it's what the dti wants. What's the message here – do not invest in the skills of your Coloured and Indian employees. Send them on silly little NQF aligned courses that don't do anything for them or the company.

And white training – that's an additional expense.

The message I got from a respected Coloured academic this morning is that influential Coloureds won't support this because they are too in with the government.

Back to the court case

The pat-on-the-back support is overwhelming. "We are very proud of you", a company director told me. But that's as far as it has gone. It then seems that the money will be raised from smaller companies and concerned entities. Those that benefit the most from this will be those larger corporates who employ the most people. The dti (and hopefully the government too) will be sent back to the drawing board and will have to find other ways to drive their bizarre racist policies. And we'll all win. The issue here is that smaller companies have smaller pockets and they cannot finance battles that larger corporates will benefit the most from.

If this economy is going to survive another Zuma term it needs to take a stand on a variety of issues and this has to be led by those who sit at the top.

Related articles

The new BEE codes and their impact on socio-economic development contributions.

Riding shotgun with Transnet - nice day for a white wedding

On Dissent

Mining industry needs transformation: Shabangu

"The mining industry is facing challenges, it is visibly clear that urgent interventions need to be put in place to enhance workers' skills," she said at a black business awards ceremony in Boksburg.

"The mining industry needs to transform to make sure that we are able to be competitive, but are also able to contribute positively and become a sector... that's a sunshine industry.

"The future is bright, we've got to do the right things."

For the transformation to take place various groups needed to become part of the skills development needed in the sector.

Shabangu said the mining industry could create many opportunities for the country.

"As we all know it is the backbone of the South African economy."

Broad-based black economic empowerment had to spread benefits beyond entrepreneurs and include communities, she said.

via www.timeslive.co.za

Is it just me or is there something positive that has been uttered by our Sue.

• Firstly she's not flogging that ownership dead horse notion. She's talking about something that we all can agree on - a skilled workforce.
• Secondly she refers to "broad-based black economic empowerment" which is substantially different to the "Broad-Based Socio-Economic Empowerment Charter for the South African Mining Industry."

It's long been argued that the Mining Charter in its current form poses problems and challenges.  It is my opinion that a closer migration toward the CURRENT AND UNALTERED BEE codes would be better for the industry.

The mining charter has two absolutes - ownership and reporting.  Reporting does require measuring compliance against the elements. As the CEO of Kumba Iron Ore writes in a letter to his suppliers (dated 25 September, 2012) 

Anglo American Kumba Iron Ore must procure from BEE entities. A BEE entity is defined as an entity of which a minimum of 25% + 1 vote of share capital is directly black owned as measured in accordance with the flow through principle.  B-BBEE ratings do not currently form part of the Mining Charter criteria for BEE procurement.

Norman Mbazima's hands are tied here.  The letter does seem to be linked to rapid mining charter compliance due to the Marikana Massacre, but this is conjecture.  The charter clearly states that they need to buy certain types of goods from BEE companies with the following consequences

You should be note that Kumba Iron Ore will, henceforth, be placing greater emphasis on the use of BEE companies in its procurement of consumables, services and capital requirements.  BEE ownership will be used as one of the key evaluation criteria in the awarding of contracts. Where you do not meet these transformation requirements, it is in your interest and ours that you embark on a process to do so. 

This is not about black business creation, this is about taking wealth from one sector of society and moving it to another.  An economy cannot grow under these circumstances.  Perhaps Sue's new found interest in skills development might be a softening of those ridiculous requirements that are contained in charters and daft codes of good practice.  It might be that the, so far useless, Black Business Council has whispered something in her ear.

Not this dweet again

Steering committee deputy chairman, Andile Tlhoaéle, says the market has always known the charter is on its way and the 30% ownership requirement did not come out of the blue. The transformation issues that faced the sector seven years ago are still relevant today, he adds.

Tlhoaéle says the charter provides companies with a framework against which empowerment can be measured, and it will unlock opportunities as it requires investment in skills. In addition, there will be larger consumption of ICT products and services.

He says the focus on the charter is on increasing the base as there is less emphasis on ownership and more on other aspects of the scorecard, such as skills development. This will increase the skills base and bolster the sector.

The charter will entrench a lot of redesign on how companies do business and develop skills, says Tlhoaéle. “Let's get the most out of it.”

via www.moneyweb.co.za

This is the same guy who shot his mouth off on TV about white women and demonstrated his clear lack of understanding for all matters empowerment. And they put him on the steering committee of the ICT Charter. Fire him for good, for fuck's sake.

Why, Rob, why?

Woolley doesn't even know

This is dire.  An email sent out by Transcend regarding the new targets read

THE NEW 2012 Employment Equity and Preferential Procurement targets affect you...

If your BEE rating period is anytime after March 2012, you will more than likely be Verified according to the 2012 targets (years 6 - 10 of the BBBEE Generic codes) on Employment Equity and Preferential Procurement.

If you havent taken this into account for your BEE rating, you could lose up to 7 points when going for Verification.

Hell - if WoolleyMammothHuntTait and co don't know, then what is the situation?  Wait I know, let's ask the expert................................................................................

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

whatever you do - don't ask the DTI

Two oh one two

Or twenty twelve as we South Africans would say.  Happy new year - I certainly hope that it's a good one for everyone.  It's taken a while to get find my feet this year but I am now officially open for business.

We were dumped with a surprise at the end of last year when EMEX announced that they were closed.   Their website carries the very simple

Emex Trust is closed. 

Which is then followed by an explanation which says that they are sad and they've gone.  You can click on the link for now but I doubt whether the site will be up much longer.  This is sad but it does seem to send a message that you really don't want to mess with SANAS at all.  So that then leaves 68 agencies to pick up the flak (Leila that page needs updating).  And IRBA does not seem to be any closer to accrediting anyone.

What's in store for this year then?

1. That dodgy BEE Bill is going to go through even though it is such a dubious piece of writing.
2. With number one comes the BEE Council being paid ridiculous amounts of money to perpetuate their incompetence.
3. We are going to see a little more corporate dissent.  I think the private sector has no real problem with transformation but I think this year will be the first year where they will start questioning why they should remain the government's whipping boy for its own inadequacies.  I'll help where ever I can
4. Namibia will finally adopt some sort of BEE policy, I just hope it's not NEEEF
5. Perhaps (and only perhaps) the verification agencies will start demonstrating a little bit of professionalism and practice efficient account management.  I've never come across an industry with such a bad reputation for customer service.
6. Udge will be the king.  Wait a minute - he is the king.  You can expect more publications to quote him liberally - but those of us in the know will remain mildly amused by the nonsense.
7. Some new codes might be coming our way (like the current ones don't work).
8. On that note - it seems as though from February the new targets kick in for EE, skills and procurement.  What we don't know is where we start measuring from.  Whatever you do, please don't ask the DTI.
9. ABACUS will still be in business even though they know that I know that they shouldn't be.
10. The FSC will go through, for the big four have willed it.
11. The DTI will (tick the correct box - multiple choices are acceptable)

• Answer their phone
• Actually do something about a fronting allegation
• Understand that they really should be the last voice when it comes to BEE interpretation
• Actually do something about the aforementioned fact
• Get competent

Don't forget to comment freely on the blog and if you want an opinion on something send me an email and I'll write about it.