There should be consequences for companies who do not comply with black economic empowerment, the Black Management Forum said on Wednesday. "These companies should be published in a public register and have meaningful fines imposed on them," the forum's managing director Nicholas Maweni said in a statement. (to parliament)
There we were hoping that once the arch racist Jimmy Manyi had left the BMF that they would start making sense again – and possibly picking up the pieces of their shattered reputation and begin contributing constructively to business issues. Alas – this is not to be. Not only is this a most ridiculous statement but it lacks any form of legal basis. It's been said before and so I'll say it again.
BEE is a voluntary process. It's never been anything other than that. The BEE Strategy document, which predates the BEE Act didn't go so far as to suggest that the process must be made compulsory. Paragraph 3.4.2 says
Black Economic Empowerment is an inclusive process. The process of BEE is an inclusive one, and all enterprises operating within South Africa CAN, AND INDEED SHOULD, participate in this process. This strategy will be implemented throughout all sectors of the economy and is not limited only to those enterprises that derive income from government procurement or those where the sector is regulated by government.
You'll notice that there is no imperative here. Words like compelled, required or must do indicate a certain element of having to do things. (By the way – that strategy document is still a very good document and contains a number of principles and ideas that have somehow lost their way in the last 10 years)
Things are a little different in the 2007 dti codes of good practice where public entities and state-owned entities are compelled to be measured under the codes. (Code Series 000, Statement 000)
3. Application of the Codes
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 entities;
Paragraph 3.1.3 simply states that if you want to do business (or economic activity as Rob likes to call it) with organs of state or public entities then you are measurable under the codes. It's paragraph 3.1.4 that emphasises the voluntariness of BEE to the private sector that doesn't do business with the state etc.
3.1.4 any other enterprise that undertakes any business, whether direct or 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.
Even Rob who thinks he knows what he is doing (although the evidence is overwhelming that he doesn't) didn't change this paragraph that much to force companies to comply with BEE. In fact Rob left paragraph 3.1.4 unchanged in his revised BEE codes. Perhaps Rob understands that compulsory compliance would not pass constitutional muster (I wrote a long piece on BEE and the constitution here).
We can therefore ignore this reactionary submission and hope that one day the BMF starts earning respect at some stage – this is not the way to go about it.
Comments