Boitumelo Sethlatswe, a researcher at the South African Institute Of Race Relations, said, paradoxically, BEE sometimes does not help black people.
"It pushes stereotypes about black people. Because there is such a high demand to get people of color into positions that, given our past, you might not have the numbers of educated people to fill positions that were currently available," said Sethlatswe. "I think in some cases, people might not recognize that that person who's sitting in the boardroom is competent."
Sethlatswe said the BEE should be combined with other strong policies in order to work.
"If we're trying to transform the country, rather than focusing on making sure that there are quotas in place, we should rather focus on economic growth, on education, on entrepreneurship. We need to make sure that we put other things with these policies in order to support them," said Sethlatswe.
This is going to be a long post because it goes through as many of the typos and inconsistencies that I can find in the BEE codes. The ultimate responsibility for this shambles lies with Rob Davies. But he's far too busy mein kampfing Das Kapitaal or the Communist Manifesto and dying his socks red to have bothered to notice that yet again he has signed another piece of rubbish. We therefore have to shift responsibility onto Nomonde Mesatywa who is the BEE chief director at the DTI. These codes are her responsibility so I'm sure all these howlers won't come as a huge surprise to her. If you, the reader, have any more to add please put them in the comments. I was speculating with my good mate Jaap Marais as to whether the DTI had outsourced the drafting of the codes to a third party – if this is the case then we have our suspicions as to who it may be. I do know that a week before they came out the crack BEE team at the DTI hastily tried to prepare a final document for publication. Their work competes with Pedro Carolino's 1883 phrasebook, the only difference being that they started writing it in English.
Here goes – ordered chronologically but with cross-referencing to the various codes and definitions. Page references refer to the actual pages in the document as published by Rob.
Page 3- codes come into operation within 12 months from date of this publication. I think this date is the 11th of October, 2013. Rob did sign the thing on the 2nd of October.
Statement 000
Page 5
1.3 – Indicate the qualifying thresholds for Measured Entity to qualify……….Could an article be missing here? Perhaps there is only one company in South Africa that can comply with these codes and the codes are written for that company.
Page 7
3.3.3.1 ………as per paragraph 3.4.2 above. Firstly if you are on paragraph 3.3 then 3.4 can only ever be below. Secondly if you are going to refer to 3.4.2 then make sure that you put it IN the document. 3.4.2 does not exist, but paragraphs 3.4.3.1.1.1 and 3.4.3.1.1.2 are included immediately after 3.3.3.1. Then to make indexing even more interesting the next paragraph is 3.4. Might I enquire Nomonde, where exactly are 3.4.1 and 3.4.2. And let's not even begin to consider where 3.4.3 is.
Page 9
4.5 and 5.3.3 - ……….. is only required to obtain an sworn affidavit….Where can I get one, I swear I need an one.
5 – please read this carefully ELIGIBILITY AS A QUALIFIFYING SMALL ENTERPRISES. If only they'd configured their spell checker to check UPPERCASE WORDS.
Page 11
7.5 –………..sector specific initiatives that promote access to the economy for Black people. More on this below (very below).
8.1 – you'll see under the Management Control that the total number of points for that element is 15. Ummmm – the code is actually out of 19 and there are no bonus points.
Ownership (I need to state that I've never been interested in ownership so I haven't read it as well as most would)
Page 16 – 2.3 refers to Annexe C. Annexe C is all about ESOPs. This same mistake is made in the definitions on page 101 where they define Net Value. I know that they do actually reference it correctly in Statement 000 (3.3.1.1) and again in paragraph 3.2 under Statement 100, but it really is about the principle
3.7 – and visa versa. Isn't that the thing we South Africans need to go and visit great aunt Toddy in Cambridge. It's that process where they put your balls in a vice and then squeeze you and decide whether you are worthy to visit. Something they only started doing quite recently because home affairs failed to instil any confidence in the UK's immigration department.
Management Control
Page 42
2.2.1 – black executive management measured as a percentage of all executive directors. Now there is a fair measurement. Just in case you think this is a typo, it's not. The same measurement is used for black female executive management under 2.2.2. But I still think it's a typo
Page 43
2.1 – wait a second. Wasn't paragraph 2.1 used to measure black directors in the table?
Page 46 – EAP formula (Formula A)
The formula is very clear – you use the EAP stats to calculate the percentage compliance that goes into formula B. There are two little major issues with this formula
It doesn't work – and I'll let you figure out why
It makes no allowance for black females
Zurrisssssssssssssssssssssssssssssssssssssssss.
Page 48
B is the total number of employees with disability……….. Is there only one disability that counts?
Skills Development
Page 50
2.1.3 – Number of black people absorbed by the Measured and Industry Entity. What's an Industry Entity – it's not in the definitions. Anyone wish to hazard a guess, Nomonde do you perhaps know?
Page 51(brackets are my explanations)
– The compliance targets for 2.1.1.1 (skills development expenditure), 2.1.1.2 (learning programmes), 2.1.2.1 (apprenticeships), 2.1.2.2 (black unemployed people) and 2.1.3 (bonus points) are based on the overall demographic representation………..More on this a little later.
Pages 52 and 53
5.4 – Legitimate training costs such as accommodation, catering and travel…………….cannot exceed more than 15% of the total value of Skills Development Expenditure. Used to be that getting there was half the fun, it seems that it's now only 15% of the fun
5.8 – Training outside the country in line with the Learning Programme Matrix………… is measurable if it meets the SAQA requirement for recognition. I wonder if international training meets the exacting standards that SAQA sets. I somehow think not.
Both of these requirements send an overwhelming message that you need to spend huge amounts on training within the boundaries of South Africa on black people. Can you imagine how this is going to be received by multinationals who send many of their people overseas for training. It's just stupid. Both are stupid. And the stupidest thing is that this barely scratches the barrel when it comes to these codes and stupidity.
Page 57
Under Category G training, learning achievement. What you should achieve is "complete understand of job or work". Do you think that the drafters of these codes derived their skills from informal on-the-job training? If so then it makes sense that category G should never count more than 15% of skills development spend.
Page 58
Formula 1 – the EAP formula is for 2.1.1.1 and 2.1.2 which is explained above. But wait a second, 2.2 above tells us that the EAP formula must be used for learning programmes and the bonus points. Formula 2 clears up a little bit of the mystery. B can be used to calculate the bonus points. As to what the other things that B represents are. Well that's a major mystery.
B is the percentage of spend in the measurement category that are black people. Reinforced with this … measurement category that are black disabled people. Now I really need help Nomonde. How do I make the percentage of spend into that are black people? Spend is not black people – spend is normally ON black people. This DTI-approved on-the-job drafting training is really not working.
And then we are still left with no formula for 2.1.1.2. Let's move onto the next element.
Enterprise and Supplier Development
Page 62
2.2 – This is Supplier Development
2.2 - This is Enterprise Development
Are you seeing the issue here? There is no 2.3. And 2.3 is very important because they refer to it in 3.2.1, 3.6, 4.1.3 and 5.10 (not conclusive).
Page 64 – Empowering Supplier
3.3 paragraph C. At least 25% transformation of raw material/beneficiation………….I can't be sure if there is something wrong with this sentence and perhaps if you are in the transformation of raw material/beneficiation business this makes sense. My question is WHAT? 25% of WHAT? Or transformation of 25% into WHAT? This is not apparent to me at all.
Page 65
3.6 – Procurement of goods and services and any other activities that fall under 2.1 will not qualify for scoring under 2.2 and 2.3 (which doesn't exist) and vice versa. This doesn't make sense. My reading of this says that if you buy from a supplier who is a beneficiary then this buying can't count under supplier development. What then about discounts (9.1.11) or prompt payment (9.1.20)? And I can't figure out the vice versa at all.
3.7 – Beneficiaries of supplier and enterprise development are EMEs or QSEs which are at least 51% black owned or black women owned. This is confirmed on page 97 under the Enterprise Development Contributions definition. But if you go to page 102 "Qualifying Enterprise and Supplier Development Contributions" you are told that these are "contributions targeting EMEs and QSEs which are at least 51% black owned or at least 30% black women owned".
Page 66
4.7 – Measured Entities receive recognition for any ED or Supplier Development contributions that are quantifiable as a monetary value using a Standard Valuation Method. Now go off to page 105 which defines Standard Valuation as a "standard valuation method for an asset, an economic interest, or any other instrument or right relevant to measurement under statement 100……". I think this little addition is as a result of an overzealous drafter who wanted to impress his/her boss. They did it twice (see paragraph 3.1.1 on page 84). Their boss (could be Nomonde) never read the final draft and now will only be impressed because I pointed it out. (As it turns out - this Standard Valuation Method thing in this context was in the 2007 codes. Another opportunity to fix up a mistake in the last codes has past us by).
4.1.2 – "are encouraged to develop and implemented"
Page 68
5.9 – "Trade Commision's: any commission……..". It's difficult to explain exactly what is meant here but it could be "Of a trade commission".
Page 70 (this is courtesy of Gerhardus)
Paragraph 6.5.3 "The exclusion of imports under 6.5.2 are subject to them having…….." Who is THEM exactly? Is this the manufacturer of the imported product, or is it the importer?
Socio-economic development
There was a major outcry when Rob presented his revised SED code. So he withdrew it. But he didn't withdraw all of it. You may recall at the beginning of this post I told you about paragraph 7.5 of Statement 000 (page 11). Go to page 85 paragraph 3.2.1 "in favour of beneficiaries …..with the specific objective of facilitating income generating activities"….Page 104 (like page 11) tells us that "the objective of SED contributions is the promotion of sustainable access for the beneficiaries to the economy". Isn't this an amendment? Amendments need to be submitted for comment - take a look at section 9(5) of the BEE Act (as amended).
Beyond a joke. A joke at our expense. I bet the dti are pissing themselves laughing because once again they've completely stumped us
These are but a few of the howlers and inconsistencies. Nomonde please accept this piece of useful career advice. Don't mention that you were responsible for the drafting, ignoring of comments and ultimate gazetting of these codes on your CV. Prospective employers might not look favourably on this accolade.
And doesn't care much for AA Milne or Michael Bond. Clearly we aren't dealing with the average six year old. This six year old is fixated by Star Wars, Harry Potter, Slug Terra, Ninja Turtles (this afternoon brought us Karate Kid). Not only is he fixated but he is the neighbourly expert on each one with his friends coming round for playdates and being encouraged to adopt a character from one of those shows and play along. Should they wish not to comply then Oliver will happily play all the characters on his own. He willingly imparts his extensive knowledge on the subject to his unsuspecting family members and anyone within earshot, even his brother.
It's been a big year for Oliver. His first year in big school has been a great challenge for him, one that he has absolutely relished. He's exposed to so many varied activities and has given a lot of them a good go. Karate seems to be the one that he has really latched on to. He was given a black belt by the Traillmeister (or Sensei Steve) who is a legitimate black belt and so he now has something to aspire to. On top of this he's become very adept at J-boarding, cycling and swimming. We've been told by an independent source that he's actually quite a bright little boy (not surprising with a mother like his) and we have seen little flashes of brilliance in the strangest places. On top of this he's also very rule bound – believe me intelligence and rules don't work well. We were coming back from a trip and I was pushing the trolley out of the airport. I asked Oliver to climb on the trolley because it would have made it easier for me. "I can't Daddy". Huh, why? "it says on the handle". Lo and behold there is a small sign on the handle telling us what we can and can't do and one of the things is NO CHILDREN ON THE TROLLEY!
Sadly our long talks on the way to school have ended. We now drive to school and his mother does most of that. I miss those interactions and will now have to look forward to walking James to school when he starts in a few years' time. I would hate for some of our stories to be forgotten so I'm going to go over the nature of our chats and stories. It worked like this. Oliver would request a story as we left home and then would set (read dictate) the structure and nature of the story. It would go along these lines "Daddy tell me a story about a flying dinosaur, Lunar Jim, Spiderman, Asterix and John Lennon (the latter are added in by me for diversity)." OK – you see Spiderman was walking…………… "No, you start with once upon a time". OK - Once upon a time Spiderman was walking near a flying dinosaur………. "The flying dinosaur needs to be my pet". I see - Once upon a time. And so it went. As the story developed or regressed depending on my mood Oliver would add in other little features and effectively hi-jack the story. One particular story sticks in my head. This one involved Spiderman, Batman, Batdog, Spiderdog, Batcat, Spidercat and Batstrich and Spiderstrich. All these characters were of Oliver's making, the latter two being ostriches. Oliver's favourite fluffy toy was an ostrich that his grandmother had given him when he was born. We call it Mr Strich.
Six brings more responsibilities and adventures. He's already proved to be a loving elder brother (James adores his brother), a great friend and the perfect eldest son. He's more independent than ever and his confidence grows in leaps and bounds. He is very loved by his family and makes us prouder of him every day. Happy Birthday dearest Oliver, these last six years have been the best of my life.
Let us not stray from tradition. This year's Peter Green track is taken from an album of Fleetwood Mac outtakes during the Green era. I have attempted to cover this song at an open mic evening. For those who which to cover it the Then Play On version is in open D
This track is taken off the Warts and All live album. There is not much decent listenable live Patto stuff around and this is about as good as you get. Mike Patto's voice was a little damaged and so he doesn't sing the whole set. Ollie sings a number of tunes during the gig. This track is actually called "How's your father" and Ollie wrote it. He does a pretty good job on this version.
The Consulting Engineers South Africa (CESA) sent out a note to its members telling them that the DTI is hosting a workshop on the 5th of November (2013). This is what it had to say
All Sector codes, including the construction sector code, are then expected to align with these revised codes within 12 months from the gazette date.
The dti will be hosting all sector charter councils in an alignment workshop on 5 November 2013 when the process, expectations and time-lines will be determined.
We know that the DTI is dead keen to have their new codes foisted on all and sundry. That their latest gazetted codes are complete rubbish is of little concern to them (has it ever been?). This reminds me of a conversation I had with Patsy Downs (FirstRand's BEE lady) a year ago when the draft codes came out. I said to her that we had to block these codes because they are no good – she wasn't concerned because the FSC had just been gazetted. The time has come for her to be concerned – the FSC WILL be amended to reflect the new codes' misguided ideology. As to how they are going to do this under the FSC remains to be seen – but every other code must either be repealed or aligned. It'll probably be easier to repeal than to align, all companies would then fall under Rob's tombola. This in itself brings up a new set of challenges. I don't think that the FSC will be repealed, it's too formal and too well negotiated.
If there are any amendments to the sectoral codes then they have to follow the normal process. And if this requires a 60 day comment process then I will advocate that we get everyone together and submit comments that the DTI cannot ignore. We can't have a body making arbitrary rules for an economy that that economy has not accepted. Wasn't legislation under Apartheid like this?
it is highly likely that if the party continues to favour the black elite at the expense of the poor through measures such as the new BEE codes, it will lose its grip on the latter too
I have just finished writing an analysis of the codes for a client. I'm ready to present now. If the codes are appealing to a black elite then I can assure you that black elite is made up almost entirely of Africans
Pierre de Vos ran a commentary on the Solidarity WCape case. I think it's a landmark case and is very welcomed – de Vos' conclusion at the end of the post highlights the issues we face with legislation that is intended to redress the injustices of the past
The judgment ….. affirmed the importance and legal validity of employment equity measures and also accepted that groups who used to be defined differently in terms of Apartheid race categories, still often have different opportunities because of the varying degrees of past and on-going racial discrimination. The principle is not in issue: only the manner in which it is being implemented is.
We come up against this issue all the time. Think in terms of Eskom and their implementation of empowerment. That aside the most interesting paragraphs in de Vos' post relate to the constitution and redress. I've combined a variety of paragraphs into one small paragraph to get to the point.
Wisely, Solidarity did not challenge the constitutionality of the relevant provisions of the Employment Equity Act (EEA). Such a challenge would certainly have failed, given the Constitutional Court jurisprudence on redress measures and not even Solidarity and its lawyer, Martin Brassey, were foolish enough to pursue that line of reasoning. (The Labour Court) pointed out that the Constitutional Court has found that redress measures are a prerequisite for the achievement of substantive equality, the court affirmed that the Employment Equity Act (EEA) itself mandated the imposition of redress measures in the workplace.
And here is the crux
In short, the judgment once again affirmed that redress measures are not discriminatory. Redress measures are not a form of "reverse discrimination", instead they are a prerequisite for the achievement of equality – something which we have not yet achieved and will not achieve for some time to come. It is exactly the absence of redress measures that would be discriminatory as this would perpetuate 350 years of racial privilege and would allow the status quo to continue.
For those who wish to challenge BEE on a constitutional level (which I think would fail) note this paragraph
It is important to note that this judgment only relates to an interpretation of the EEA and does not deal with redress policies and plans (such as admissions policies of Universities) not regulated by the Act. Because of the unique wording of the Act, the court found that the failure of the DCS to take cognisance of the regional racial demographics in the Western Cape – where more than 50% of the population belongs to a group which during Apartheid was designated as "coloured" – rendered its Employment Equity Policy invalid.
My issues with the latest BEE codes of good practice do not revolve around their constitutionality. I don't think it's worthwhile (even if it was possible) to launch a constitutional challenge on the codes. I have a problem with the fact that the DTI has continued to publish codes that are vague and contradictory, which I regard as unfair. And I absolutely object to the fact that the DTI went ahead and published something that businesses who are now required to implement them did not agree to. If there is a constitutional angle then it must be that under the PPPFA the points' allocation is unfair which doesn't make section 217 happy.
This refers to my blog post over the weekend. To summarise, I am looking to inundate the DTI with legitimate requests for an explanation of why they went ahead with these codes when many people didn't agree with them. For those companies/people who didn't send in comments there are a variety of reasons to submit a PAJA application. This is what I requested.
The reasons behind your rejecting my comments regarding the codes of good practice (attached).
In addition as a white business owner I request that you furnish me the reasons why my 100% black-owned counterparts who turnover less than R50m should be accelerated to a level one status without contributing to any form of nation building or empowerment.
It is respectfully requested for the Minister to explain why the current BEE codes of good practice (29617) are no longer adequate to address the empowerment needs of South Africa.
And finally would the Minister please explain to me in writing as to how he could have published a document that lacks the clarity that is needed to implement such dramatic changes in the empowerment arena
My complete document is here. And there is a proforma template you can use here. It seems as though the application needs to be addressed to Nomonde Mesatywa directly. I would recommend that you copy the following people in on the application (all email addresses can be found in the hyperlinks). Sipho Zikode, Liso Steto, Takalani Tambani, T Matshego and Koos Roelofse. You must copy I Neethling who is listed as the contact email address for the minister.
I am definitely pushing for a judicial review which will cost money. I'm also looking for concerned people who would be willing to put up some money for this application. However the first thing I want to do is show the DTI that they can't just publish any old piece of rubbish and think we will continue tolerating it. We only have about 70 days left in which to do so.
Well not exactly, but he's not known to mince his words. Mr Gleason and I had a few chats over the last couple of days about these BEE codes and he published a lovely article in his Torque column in Business Day today. I love what he writes especially when he deals with Rob
Whatever he turns his hand to, it turns into a problem. There was that arbitrary decision to terminate bilateral trading treaties with important partners, which earned us a sharp admonition from the European Union’s trade commissioner. There was his gross failure to talk sense into his Communist Party pal, Irvin Jim, general secretary of the National Union of Metalworkers of South Africa, who went on to sabotage the economy in three easy moves.
Now Davies has gazetted amendments to the black economic empowerment (BEE) codes, which, depending on how you interpret the slovenly wording, are either to take effect now or in a year’s time.
And Davies is good at ignoring the thoughts and suggestions of others. In fact, given an argument between a hard place and Davies, the hard place is the easier option. To my knowledge, after the draft codes were published in October a year ago, he received more than 500 submissions. Those from throwaway constituents such as Anglo American, Business Unity South Africa, Steel and Engineering Industries Federation of South Africa, Solidarity and others of that ilk appear to have been ignored. Davies has listened only to the small cabal he draws around him, the sycophants who don’t gainsay him.
He’s just gone ahead and done what he intended all along.
Advocate Paul Hoffman wrote an article for BDLive in July where he correctly stated that "there should be certainty about what the law is and what it requires, both procedurally and substantively." This is not an unreasonable request to be made on legislators. The question is why have we tolerated substandard codes of good practice from the Department of Trade and Industry for so long? I can't limit the blame to Rob Davies but his tenure as minister has produced some of the most unintelligible documents we've ever seen. The new codes are an example of poor thought, poor logic and ideological hogwash. The worst of this is that we did not agree to these codes – certainly I DID NOT AGREE to those codes. How can it be that he can put out BEE codes of good practice in draft form and receive 500 plus comments and yet he ignored my comments, Anglo American's, SEIFSA's, Solidarity's etc. I'm only listing the comments that I read. Each one rejected the codes as unimplementable. Some did offer constructive comments about how to fix some of the issues. All of this was ignored almost completely. Now Davies might say that there was overwhelming support for the draft codes but I suggest that this support came from a variety of businesses and black lobby groups who have been exempted from them.
If you think about it logically what business would ever agree to being told that they HAD to have a certain level of black ownership (even the constitution protects people from this under section 18). Would a business agree to spending 6% of payroll purely on the training of black people (based on the EAP targets) and then be told that in order to get these points that have to implement a variety of programmes and submit PIVOTAL reports in order to do so. Once they'd done this and paid all the money they need to they could still be penalised by dropping a level. Which business owner would have agreed to this? Would they agree that if they have 50% black ownership that they would now have to implement the new codes (at great expense just to labour a point) and watch their 51% black-owned peers be instantly promoted to a level 2 on a scorecard that they would be lucky to achieve a level 7 under?
It defies logic. The simple answer is that as business in South Africa (which includes BUSA) we did not all agree to these codes. To add insult to injury the minister published unintelligible gibberish. Not only are they impossible to implement they are impossible to understand. There is a difference between nonsensical legislation and nonsensical secondary legislation. Legislation is interpreted by lawyers and the courts. Codes of good practice as secondary legislation are interpreted by us – the practitioners and business owners. It is not fair on us to publish rubbish and then foist it on us. To make matters even worse the DTI is no authority on the codes – you can't phone them and ask for an explanation. I come back to Hoffman's quote - "there should be certainty about what the law is and what it requires, both procedurally and substantively." These codes are not certain, they don't work and they are unreasonable.
There is some respite that is available to use under the PAJA. Section 5 allows us to request reason in writing within 90 days as to why this administrative process has impinged on our rights. And it has done so and it has done so in a most arbitrary fashion. We no longer have to tolerate this kind of bulldozing. This document will go under judicial review under section 6 of the PAJA. But before this happens please download the proforma document that I modified off the DOJ's website. I have included a number of contact people at the DTI that you should send it to. Please fill in your request and then sign it and send it to all those people. If we don't stand together and put an end to this most ridiculous method of legislating then we only have ourselves to blame for the situation that we find ourselves in. Once the 90 days are over it's too late – look what the courts said about eTolling.
Also remember that the codes are not going to be clarified and the DTI is unlikely to become a centre of reference for them. In addition you cannot simply hide behind industry charters thinking that they won't be changed. They have to be changed to talk to the new codes – yes they do have to go through the process of comments etc but there is a very good chance that they will be changed and they themselves will become as unimplementable as the new codes. The chances are also particularly good that they are going to be rushed through with scant regard for detail – which then becomes your problem.
I have also attached my request for clarification. If you would like to send me your requests I'll store them and make reference to the numbers in future blogs – I won't disclose any of the information. I am also talking to a variety of parties who feel the same way as I do and have the money to take this on judicial review. If Davies does not respond then I can head straight to a judicial review under section 6 of the act. Let's see what he does.
Become an empowering supplier, get a scorecard, get some ownership (preferably 100%) and get the tender. What a lovely idea, but can you issue certificates under gazette number 36928? I'm actually surprised that we haven't seen BEE certificates issued under the new codes already, afterall paragraph 10 of statement 000 says you can. Paragraph 10 also tells us that gazette number 29617 has been repealed (old codes). The question is "can you issue certificates under the code?' AND "have the old codes been repealed?" Percy told me the answer was no in both cases – but that's Percy's word. When you want the definitive answer there is only one person to ask and that's Chris van Wyk of AQRate. I asked for a simple paragraph and Chris sent me an impromptu text book – I therefore have to edit it down a bit.
The effective date of the Revised Codes which, on page 1 of the Notice in terms of which it was issued, states that it will come into effect within 12 months from the date of the publication thereof (11 October 2013). Any practitioner of law reading that provision would tell you that that provision means that nothing in the rest of the 107 pages gazetted is operative until 11 October 2014. Clause 10 of Statement 000 of the Revised Codes however tries to introduce an opt in provision for those entities that would wish to be measured in term of the Revised Code for the 12 months from 11 October 2013 until 11 October 2014 when it becomes effective. Because this clause 10 is not effective itself until 11 October 2014, it loses all its meaning.
It couldn't be more succinct than that. If you don't believe me look at the notices on all the other charters that we published under section 9(1) of the BEE Act.
Legality aside, issuing a certificate other than an EME certificate, under 36928 is a very complex affair. In order to be considered under procurement you have to be an empowering supplier. You can read about that bollocks in the code itself. It's very clear that even black owned business need to be empowering suppliers. And this is where one of the many contradictions of the codes comes to the fore. Rob tells us on page 9, paragraph 5.3.3 that a QSE need only get an affidavit confirming revenue less than R50m and level of ownership. If you are 100% black owned then you are a level one. But that's all you are – a level one. That's like being a Ferrari badge – you're missing a car to make up the title Ferrari. If you wish to provide points to your clients under code 400 then you must be an empowering supplier. And in order to be so you're going to have to be verified to confirm this status. And this is going to cost geld, admittedly less geld than a poor old white company that needs to prove all the elements as well as the empowering supplier status but it's still going to cost geld.
But wait there's more. In paragraph 5.3.2 Rob tells us that a QSE with more than 51% black ownership is a level two contributor. They'll still have to prove the empowering suppliers status, but that's not all. They have to be verified in terms of ownership. Don't believe me – take a look at page 100. They say that a 51% black-owned (or black woman-owned) company needs to earn all the points for Net Value. This must be independently verified.
And now onto the next point that Chris pointed out to me. If the new codes only measure empowering suppliers then scorecards under the current charters cannot be considered under the new codes. Companies subject to the charters can't just then go off and get verified under the new codes because Rob won't let them – see paragraph 3.2.3 on page 7. Gerhardus argues that almost every company can fit within the ICT code – but that's a debate for another day. Whilst I'm talking about Gerhardus, he told me that that 36928 is so vague that even the loopholes are grey. Now we have an uptake issue. No company is going to volunteer to be the first company to be verified under the 36928 because none of their suppliers (other than EMEs) will have a certificate stating that they are an empowering supplier and hence they'll miss the 40% subminimum under paragraph 2.1 of Code 400 (page 63) and will be discounted.
I'm starting to see the humour now. However if you want a very balanced overview of this shambles, AQRate is hosting a course in Cape Town on the 28th of October, 2013. Courses in Durban will follow a few days' later, hosted by Brigitte Brun. I don't endorse many courses because I think I can host better ones but Chris and his team have picked up the slack left by Kevin Lester and lord knows there were queues around the block to see Lester's performances. Tell Chris I sent you.