At face value it appears to be some sort of black industrialist assertiveness. Dig my man the Zunguriser
Sandile Zungu, a vice-president of the Black Business Council and an economic adviser to President Jacob Zuma, described this as a "most welcome" move that would help create new black industrialists.
"Whoever hates this clarification notice is trying to vulgarise it, [by] saying it is now going to create 'black oligarchs'. It is an insult, it is wrong." The aim of these rules was to "banish fronting to the dustbins of history", he said.
"Most [employee share schemes], especially in the retail sector, have become synonymous with fronting, where there are claims of people being empowered, but when you look deeper into it, there has been no such empowerment."
The reference here is to a clarification note that the DTI published on Friday, the gist of which was carried by BDLive yesterday
The first clarification notice, published on Tuesday in the government gazette, gave rise to furious behind-the-scenes lobbying by stakeholders — ranging from business to trade unions — who would have been adversely affected. The new interpretation of the codes would have the effect of slashing the black economic empowerment ratings of hundreds, if not thousands, of firms and removing the incentive for companies to involve employees and communities in ownership beneficiary schemes. The department said on Friday that "the notice will not have a retrospective effect. This means that all B-BBEE (broad-based black economic empowerment) deals concluded prior to May 1 2015 will not be affected. These deals will have a full recognition under Code Series 100". Secondly, Mr Davies "will appoint a technical task team which will explore the appropriate balance between active (direct) and passive (broad-based schemes) ownership. The technical task team will report to the minister of trade and industry its recommendations within thirty days", said Friday's statement.
I think we've seen through Zungu, the irony of his quote does not escape me, he used the BEE equivalent of the race card "FRONTING!!!!" as a smokescreen.
What then is the agenda behind Rob's decision to start talking about active and passive shareholding all of a sudden? I think there are two aspects to this.
- There are few potential black investors who have the cash or desire to pay for shares. So few in fact that companies have very few choices here. They could either vendor finance them as they have in the past which the new codes don't particularly like or they could just hand them over to the very few connected people (like Zungu).
- As Loane Sharp wrote a few weeks ago "it is probable that the DTI is forcing through the new BEE codes to prejudice "white" businesses and advantage "black" businesses (the DTI's terms) ahead of the R1-trillion rollout of government infrastructure projects." If the codes are so draconian and so biased towards ownership then it is impossible for white owned etc type businesses to compete on points under the PPPFA so the connected blacks and rent boys walk away with the loot. Why not make it almost impossible for white companies to create shareholder wealth for their employees. When they fail they will be branded racists and anti-transformation and the ANC can then hide their incompetence behind a sordid veneer of racism.
The second option is more attractive. It plays perfectly into the hands of connected black business, the political elite and the ANC.
Interestingly Sharp warned us two weeks ago that this Rob notice was coming
The DTI's ultimate goals are becoming clear. The patron of the Black Business Council (BBC) is President Jacob Zuma's economic adviser, Sandile Zungu. The BBC is "the cohesive voice of black business" and aims to "accelerate the participation of black South Africans (in) the intended infrastructure rollout by the state (of) projects offered by state-owned enterprises". The DTI aims to create 100 black South African industrialists in Mr Zuma's present term. Evidently, 18 such applications have been processed since last August. Mr Zungu has dismissed employee share ownership plans as "shams", despite their growing popularity as a means of empowering the greatest number of historically disadvantaged people. He advocates the advancement of a limited number of black tycoons — a goal shared by the DTI.
Back to Zungu's fronting dustbin (which is extreme bullshit). This policy is a nest feathering exercise and once again the poor can get fucked. What the ANC needs is financial support, the poor might vote for them but their propensity to protest against the ANC's lack of desire to actually deliver any services, schooling etc to the poor doesn't create a warm fuzzy feeling. On top of this the poor are not going to finance the ANC, create these black industrialists who have the potential to become oligarchs and the ANC is in the money. Problem is that the tax payer is less willing to finance all this. That's why it's incongruent that the ANC government persistently attacks its only loyal constituency – the white tax payer. Suddenly you see that poor incompetent commie Rob is just a pawn. I don't think that there is any financial gain for him in this, and I'm not sure that he wants the gain.
But I sense that this arbitrariness is going to be questioned in court. Something Safiya Patel said in the RDM article rang very true
Webber Wentzel partner Safiyya Patel said the notice violated several legal requirements and was done without consulting stakeholders. "By referring to this notice as a 'clarification', the DTI has sought to avoid the provisions of the BBBEE Act, which requires that any amendments to the [codes] must first be published in draft form and be open for public comment for 60 days."
Our court case is imminent. There has not been a better time to stop this railroading by asking the Constitutional Court whether Rob and his backers are allowed to do this.
Comments