Paul Janisch

Corporate dissent – mining the pits that the ANC have descended into

Business has long been the government's whipping boy. We are reminded on a daily basis that we are either capitalists, colonialists, racists, anti-transformation, corrupt, white, coconut and similar. As a general rule business in South Africa takes it. They know that the government/ANC don't take criticism at all. Yet they are more than willing to collect the taxes from business whilst calling them horrible names.

The norm for mining executives has been to keep quiet despite repeated provocation from government ministers and bureaucrats — some of it blatantly incorrect. A classic example was the attack launched on De Beers in May 2005 by then deputy mines minister Lulu Xingwana, who chastised the group for daring to appoint a white CEO and described the De Beers board as "lily white". There were three black directors on the De Beers board at the time — two from Botswana and one from Namibia. De Beers, typically, declined to comment.

An article in BDLive this morning suggests that there might be a change in attitude from the mining sector.

TOP executives at South Africa's mining companies may at last be "finding their collective backbone" — as an investor once pointedly suggested they do — judging by recent public statements by Sibanye Gold CEO Neal Froneman and Northam Platinum CEO Glyn Lewis. Mr Lewis got stuck into the government, citing "dysfunctional legislation" and an "overregulated environment". Mr Froneman raised the possibility of clashes over the Mining Charter ending up in the Constitutional Court. Such comments stand out because they are so unusual. Over the past five years or so only two mining executives spring to mind as having been prepared to openly challenge government utterances "on the record". First was former Anglo American CEO Cynthia Carroll, who pulled no punches in her opposition to nationalisation proposals being bandied about. New Anglo CEO Mark Cutifani followed suit. Addressing a dinner at last year's mining lekgotla, he commented: "We must remove uncertainty and that means the state must stop threatening ownership."

This is very overdue, grimly though the article suggests that they are speaking out because the relationship between the mines and government is not good at all. But surely this is just a metaphor for government's attitude towards business anyway. If it was vaguely business friendly then we would not have this quagmire of laws and regulations that need to be implemented, followed and reported on. However business does have its uses. As the Daily Maverick quoted from Prince Mashele's book, The Fall of the ANC

The worst thing about the ANC is that the blacks it has been enriching are not really engaged in production; they wear suits and wait for deals and easy money from their real bosses—white entrepreneurs. Blacks who have benefited from BEE schemes are, in the main, politically connected to the ANC. [I]n truth, BEE has in our opinion been a redistribution scheme for ANC leaders and cronies; the word 'black' has been used to legitimise what is in reality a sordid money affair.

How much more must the balance of businesses in South Africa have to take before they start kicking back? Next week we start raising money for our legal challenge on the DTI's latest load of rubbish (read codes). I know that the larger listed companies will be reluctant to support our cause financially – it's too risky, they can't be seen to challenge the government. In private they support the concept, but can't make a contribution. I am hoping that after we've gone to court and sent a very clear message to the government that there are people within the business community who will not tolerate this legal anarchy that the government is advocating, that larger businesses start speaking out more about this inept tyranny.

I'll be keeping a blow-by-blow account of this whole process on the blog. In the interim let's start encouraging more dissent. The government doesn't like us or doesn't trust us and they let us know at every opportunity. Surely if we feel the same we can't allow the Business Day to express this as a lone voice.

Sector Charter Alignment to the Revised Codes | Our thoughts and findings on all matters B-BBEE

Jacob Maphuta began the engagement by outlining the principles from which the drafters of Sector Codes are not at liberty to deviate. These included the following elements of Statement 000:

• The establishment of five elements in section 8
• The key principles set out in section 2
• The revised B-BBEE recognition levels set out in section 8
• The elevation of black owned entities set out in sections 4 & 5
• The Priority Elements and attendant discounting principle set out in section 3
• The redefinition of Enterprise and Supplier Development beneficiaries (removal of category B) in section 3.7 of Statement 400

The Sector Charter Councils can deviate on the thresholds for entities (as before), and are at liberty to set targets in excess of those in the Generic Codes.

via blog.mpowered.co.za

This is the first time I've come across Seth Randall. I like the way he writes. I recommend everyone read his blog.

Non-negotiables huh? Who the hell do the DTI think they are. This is a democracy and a constitutional democracy at that. Law makers which includes those who enjoy protected employment at the DTI, cannot legislate in this fashion.

Remember that each sectoral code enjoys equal status. They don't have to align with the DTI's ill conceived whims. And we as the public cannot allow them to get away with this.

By the way - my lawyer is finalising our case against Rob Davies and the DTI. I'll be sure to keep a regular update on this blog.

Who is an African?

Thabo Mbeki is one, we know that for a fact. We know that the term African is now used to describe a certain segment of our society. That's not right, it's not a segment - it's a racial classification. It's rather an unfortunate classification because it is built on a certain perception and not a matter of fact. The drafters of the early BEE codes decided to define black as African, Coloured and Indians who are effectively South Africans by birth or descent. They had to do this because they realised that by 2012 they could no longer rely on the definition of historically disadvantaged individuals (or South Africans as the case may be) because this definition anchored on who had the vote or suffered discrimination before April 1994. Those born after April 1994 would be eligible for the vote in 2012 and it was therefore impossible for them to vote before April 1994. This group of people would then no longer be regarded as HDI/HDSA and hence would no longer be favoured under BEE and EE legislation. They had to use African. It might have been easier to have used the word Bantu – which was very popular within the grey-shoed corridors of the Apartheid administration. Wikipedia explains why the term Bantu might not have made the grade here

In the 1920s relatively liberal white South Africans, missionaries and the small black intelligentsia began to use the term "Bantu" in preference to "Native" and more derogatory terms to refer collectively to Bantu-speaking South Africans. After World War II, the racialist National Party governments adopted that usage officially, while the growing African nationalist movement and its liberal white allies turned to the term "African" instead, so that "Bantu" became identified with the policies of apartheid. By the 1970s this so discredited "Bantu" as an ethno-racial designation that the apartheid government switched to the term "Black" in its official racial categorizations, restricting it to Bantu-speaking Africans, at about the same time that the Black Consciousness Movement led by Steve Biko and others were defining "Black" to mean all racially oppressed South Africans (Africans, Coloureds and Indians).

It was Steve Biko who opted for the word Black as opposed to Bantu. So we all understand the term African to mean a type of black person. But there are problems with this. Webster's defines African as

1. a native or inhabitant of Africa
2. a person and especially a black person of African ancestry

But it was Mbeki who helped us put the term African into perspective. On the 18^th of May 1996 he made the famous "I am an African" speech. Here is a very précised version of the speech

On an occasion such as this, we should, perhaps, start from the beginning. So, let me begin.

I am an African.

I owe my being to the Khoi and the San whose desolate souls haunt the great expanses of the beautiful Cape

I am formed of the migrants who left Europe to find a new home on our native land. Whatever their own actions, they remain still, part of me.

I am the grandchild of the warrior men and women that Hintsa and Sekhukhune led, the patriots that Cetshwayo and Mphephu took to battle, the soldiers Moshoeshoe and Ngungunyane taught never to dishonour the cause of freedom.

I am the grandchild who lays fresh flowers on the Boer graves at St Helena and the Bahamas, who sees in the mind's eye and suffers the suffering of a simple peasant folk, death, concentration camps, destroyed homesteads, a dream in ruins.

I am the child of Nongqause. I am he who made it possible to trade in the world markets in diamonds, in gold, in the same food for which my stomach yearns.

I come of those who were transported from India and China, who's being resided in the fact, solely, that they were able to provide physical labour, who taught me that we could both be at home and be foreign, who taught me that human existence itself demanded that freedom was a necessary condition for that human existence.

Being part of all these people, and in the knowledge that none dare contest that assertion, I shall claim that - I am an African

His speech encompasses almost every person that you and I might know who lives within the borders of South Africa (it might be only Radovan who has been excluded from this definition). Then you take the African National Congress whose manifesto makes for somewhat amusing reading. It was only in its very early days that it defined its membership as Native (which was and still is a derogatory term for black people). There is no way that the ANC limits itself to African membership (as defined by the amended BEE Act). African for the ANC is a term for South African voters who wish to join that party.

Let's take me as an example. I can trace my South African roots back a few hundred years. I have a South African passport and the only close relative of mine who might be able to get her hands on the coloniser's passport is my mother. I am not eligible for one. My ancestors were migrants who left Europe to make this country their home. In fact coming from Dutch descent my family too were colonised by the English in the 1800s.

Let us now consider Rob's disgusting new codes. The definition of black remains the same but he states that a 100% black-owned business turning over less than R50m need only sign a declaration that they are 100% black owned. But black encompasses African – and African by definition cannot be limited to a type of black person. What I am now advocating is that all those companies/entities who fulfil the definition of QSE and are African (as per Mbeki's definition) owned start making use of the new codes. What you would want to do is sign an affidavit stating that your company is 100% African owned (as permitted by the Constitution of South Africa) and that your turnover is less than R50m. If you have any African female ownership state this as well. Don't call it a BEE certificate, call it a certificate of ownership and turnover. Also it is strongly discouraged for you to state in the affidavit that you are a level 1 contributor because that's not really true (unless of course you are black). Leave this to the reader to figure out.

This will wreak absolute havoc that frankly the DTI deserves to deal with.

 

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Manyi's influence still very prominent in the BMF

Lots of laws and no desire to enforce them - why do we bother? BEE Act content

Neren Rau, the CEO of the South African Chamber of Commerce and Industry, says empowerment was not supposed to have been legislated beyond the voluntary codes of good practice, but this has rapidly gained momentum to the point where it is now.

He also says foreign investors do not have to abide by the regulations, and that the "punishment" comes where companies "lie and front". But the "codes are structured so strongly that not to comply is going to be very difficult".

However, Mr Rau also says the government struggles with enforcement of legislation across the board. So, despite the strong enforcement mechanisms in the new law, including from verification agencies — and possible lengthy jail terms for those deemed noncompliant — empowerment will be no exception. "They know they can’t police this effectively."

via www.bdlive.co.za

If I may throw my opinion into the mix this is a useless and toothless piece of legislation.  I am sure they will start with a little vigour and attempt to prosecute certain companies for fronting.  The only successes they'll get will be smaller companies who can't afford a decent legal team.  The bigger companies will throw a significantly more competent legal team at the NPA, DTI or whoever chooses to prosecute and embarress them completely.  Not that they mind that.

First we have to have a BEE Commissioner, as Thalia Holmes writes in the MG, this is a long way off (be aware that she quotes Dilly in this article who once again demonstrates that he is devoid of a clue.  He really should not be talking about any business matters ever).

(A)ccording to Nomonde Mesatywa, the chief director for BEE at the trade and industry department, this reality is still a distant one.

"As the DTI, we are still in the process of setting up the BEE commission itself," she said. "No appointment has been made as yet. We are hopeful this will be done before the end of the 2014/15 financial year."

If Nomonde says she is hopeful then you can add another four years onto this timeline.

I have a plan for all South African owned businesses turning over less than R50m.  See the next post.

(And sorry I didn't include you in Dramatis Personae in my last post Dilly.  For those who want to know, Dilly is Andile Tlhoaele).

Treasury, PPPFA and reforms

Craig Terblanche forwarded an interview with Kenneth Brown, National Treasury's chief procurement officer who been given the responsibility of overseeing the design and implementation of "rigorous procurement reforms" that Pravin wishes to implement. These reforms intend to improve infrastructure project management, strengthen service delivery, eliminate waste and root out corruption. The priority being to improve efficiency and visibility across the value-chain so as to guarantee value for money and a reduction in waste. (most of this has been cut and pasted directly from the Engineering News article).

Part of this process is to take a look at the PPPFA

A technical committee has been established to assess all aspects of the Preferential Procurement Policy Framework Act (PPPFA) to deal with some of the objections that have emerged from certain interest groups. "By the end of June, we should have a sense on where we are headed with the PPPFA and whether amendments are needed."

The "certain interest groups" are in all probability the Black Business Cabal Council. I wrote about this last week. In the post I quoted something from BDLive where "BBC CEO Xolani Qubeka said. The act in its current form was "antitransformation". His criticism is based primarily on the 90:10 (price to socioeconomic ratio) gauge used for the adjudication of tenders."

The Engineering News article refers back to section 217 of the constitution

Part of the agenda involves a process of legislative reform, guided by Section 217 of the Constitution, which stipulates that public entities contract for goods or services in a way that is "fair, equitable, transparent, competitive and cost-effective", while leaving room for "preference" in the allocation of contracts, as well as "protection or advancement" for those "disadvantaged by unfair discrimination".

I cannot see how changing the PPPFA rules are going to provide the necessary reforms that are going to talk section 217. In fact the BBC have no time for section 217. What they are advocating is the removal of the PPPFA altogether to further their specific agenda – which is quite patently to get the state to hand over business on the basis of race and race alone. Besides the fact that this is neither fair, equitable, competitive or cost effective (it is very transparent) it opens up the door for rampant corruption and abuse. At least with the PPPFA you've got a few basic guidelines and processes that could prevent abuse. Imagine a scenario where a government department (SOE or the like) state that certain procurement can only come from black-owned businesses. You must understand that the BBC operates at the highest levels in government departments so they could influence what gets set-aside. This could be certain types of high-end items that the BBC's members have exclusivity over. They could collude and ensure that an inflated price is set for each bid (like the construction sector during the world cup). That government department will then pay that premium price that the BBC has engineered.

It is impossible for the BBC to get its way and for Treasury to ensure that it "guarantee value for money and a reduction in waste". I am slightly heartened by Ken's suggestion that by June they'll know what to do with the PPPFA and whether to amend it. I just hope that he is able to resist the extreme pressure that Zuma's buddies in the BBC are able to exert. I also think we could have a defensive constitutional challenge on any of these reforms. It'll probably be my responsibility to do this.

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DTI names more products affected by local-content regulations (PPPFA)

PPPFA in a Free (State) world