Paul Janisch

Trust – something we don’t have in the DTI (they don't trust us either)

Merriam Webster defines the word Trust as "belief that someone or something is reliable, good, honest, effective, etc." Do we have any reason to trust Bolshie Bob and his band of untrustworthy souls? (I frantically looked for an apt Commie Russian word for Bolshie's minions but I lack that communist thing). We don't. I don't need to think about this nor is it necessary to engage in any form of debate with my inner conscience. Bolshie Bob has taken Stephen Covey's second habit of highly effective people to heart when it comes to issuing legislation and codes of good practice. For the uninitiated the second habit is "start with the end in mind."

History has shown that Davies' draft BEE codes are in effect the final product. This is in spite of 555 submissions received. Logic states that a number of those would have been very well thought out and offered constructive comments on the impracticality of what he had proposed. These comments were largely ignored. The only difference was that you wouldn't drop two levels and they removed the SED code that spoke of 100% beneficiaries. They then published a document that makes for puke-inducing reading. The retching was made worse when the DTI removed the SED code from the draft and then published a final SED code that we had never seen before – in effect we were not asked to comment on that at all. I don't know why I bothered getting upset reading the final code, I should have been grief stricken at the draft phase. It's just that I didn't know that the draft was in fact the final code.

A few other have codes have come up for comment. I haven't looked at them for a couple of reasons. The first one is that they are built on a compromised document and secondly I know that they are going Covey here – all comments that address the impracticality will not be considered. In short it's simply a lack of trust. I would imagine that those companies subjected to these codes feel the same.

And here is the rub of this post. It was announced last night that Rob has published the revised FSC for comment. Comments close on May the 17^th. Again I have got a draft of the revised FSC code and have had it for about a year. I knew it was coming but I thought it would take a long time to get to comment phase. This is the big cheese. It took years to move from the first draft from 2003/4 to the one that we know now. And therein lies the problem.

Here is a bit of a timeline

1. Early October 2012 – draft revised codes come out. Comments close at the end of November
2. 26 November 2012 – Rob publishes the final FSC (ostensibly to discourage the financial sector from commenting on this new codes)
3. On or about 17 March 2016 – the draft FSC submitted for comment

If you haven't seen it yet, there is a problem. The current FSC was given 1228 days to succeed. Or 3 years, 4 months, 12 days. In reality it's less than that. The first scorecards under those codes would have started coming out 6-12 months later. In effect Bolshie Bob has given the transformation of the financial sector less than three years to succeed. That's not even a fighting chance. He quite simply doesn't trust the industry. He doesn't actually trust anything. If the head honcho doesn't trust anyone then his minions are going to display a similar tendency. Because he doesn't trust them he will drive his Stalinist agenda onto the unwilling pubic expecting them to comply.

By the same token we (being everyone that isn't part of the state) don't trust him. How do we know that he won't change his mind in three years' time and thrust something even more unfair on us? As it stands we don't believe that he will actually consider the comments on a new system because he hasn't bothered in the past.

In a democracy, which we purport to be, the lawmakers are there for the benefit of the public. It is up to them to develop a trusting relationship with us. In the case of transformation it is vital that we can trust that the decisions made on our behalf are in our best interests, because it is up to us to effect this strategy with our own money and resource. This trust must initially come from the lawmakers. The ANC-government, like their Nationalist predecessors, have not done so. The trust relationship has diminished to almost negative under Zuma.

This leaves us in a position where we have an obligation to submit comments and take part in the lawmaking process even though we know that our input will not be considered. You see Bolshie Bob has consistently shown that he legislates with the draft in mind.

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Bolshie Bob can thank his lucky stars that his job allows him to grow such a great beard. Such fashionable facial hair permits our minister of trade and industry to hide his red face when either he or his minions publish something or utter something that is just not defensible. I would imagine his skin burns hot under those bristles, and all the time too.

My broader question is how does Rob save face when it comes to most of his programmes/policies/delusions? How do we let him down gently so that he doesn't look like a patsy who ran riot (like Mbeki did – but he wasn't that much of a patsy) at Zoomer's pleasure. I have no interest in the black industrialist programme. My only wish is that it works and that it doesn't become yet another policy that results in "state capture" – the new cool word. But I do have a great interest in Rob's revised codes.

Are they with us for good. I hope not, they really seem to be a cause of a great deal of annoyance and irritation. Clever companies will put off measuring themselves against these codes for the next 8 months or so (you can if you measure a period that ended before 30 April 2015 – if you don't understand how then ask me and I'll tell you). I have heard that the new BEE Commissioner (a Ms Zodwa Ntuli) is now keen to get the new codes out there and implemented and see REAL BROAD-BASED TRANSFORMATION. Well Zodwa I have some interesting news for you, the revised codes will have the opposite effect. When scores drop so will your BEE programme and with it your job. You can check fronting until the bovines return from their lowing in the pasture, but if you have a policy that has been rejected by the greater business community then it is kaput. To quote Beatle bassist Paul McCartney, "you can't reheat a soufflé". And this BEE soufflé is being propped up with ice-cream sticks at the moment (tenderpreneur supplied of course).

What should Rob then do?

The first should do now (now that horse has properly bolted) is build a trust relationship with those who actually have to implement these new codes. He could have done so two years ago but he is dogmatically blind and that was the old new South Africa, where King Zoomer ran the country (into the ground but we knew that then anyway). He could have listened to business instead of barging on. So Zodwa if you want your revised codes to work then please listen to my pleas.

1. Empowering supplier. What is this? It's a ridiculous requirement that will never be taken seriously. Remove it, why would you want to prejudice those companies from implementing your revised scorecard by disqualifying them as empowering suppliers in the first place? This is a critical point of failure. Remove it
2. Discounting via priority elements. Why have you taken the extreme stick approach? Your revised scorecard is hard enough to implement and when a company has made the best effort to get onto the scorecard and then you boot them off it? The consequences of this is that companies will probably stop making ED/SD and especially SED contributions. Regarding the latter, those five points for SED do determine the level that a company will get to. They will make the contribution because of that. Your revised level grades are too large for one, and secondly a company might get demoted to a level 9 because of the priority elements. Get rid of the priority elements. If SED contributions stop you will have more than just service delivery riots on your hands, there'll be hunger riots too.
3. Raising the bar of entry. Why 40 points on a scorecard that makes getting 30 points hard? And then the levels go up in 15 point increments up until a level 4 (which hovers between a level 3 and 2 under the old codes). With such large gaps companies are not going to improve a level each year, it may take years. If you look at the banking sector how they got to a level 2 in 5 years this is doable. Why would companies want to improve their points and still not reach a higher level? There's no incentive. Go back to the old levels
4. And now onto the scorecard itself
   1. Ownership – leave it as it is
   2. Management (incorporating employment equity). The EAP targets (economically active population) are so draconian that they aren't even worth considering. It took me an afternoon to figure out what a client's EE score would look like. What you have done, Bolshie Bob, is effectively marginalise Coloureds and Indians. Indians can contribute less than a point (much less actually) for senior to junior management. Why would you want to hire them in the first place? They are in effect white, and Coloureds are not much different. Get rid of the EAP
   3. Skills Development. 6% of payroll to be spent on the training of effectively African people. In a country that desperately needs to be productive, when are these people going to be at work? And that's only if you are willing to cough up 6% of payroll. This is ridiculous. Got back to 3% or payroll and provide facilities for companies to develop internal training programmes that deliver results for the company as well as the employee. That's how most people learn. The skills development code is all about unit standards and the like. It's not sustainable in its current guise
   4. ED/SD and procurement. Leave the procurement targets as they are in the revised codes but loosen the measurement requirements for procurement. How can you expect a company to go its municipality and get a breakdown of their bill with the BEE rating of each supplier to that municipality. They have no control over who gets awarded the tender. This is just one of the ridiculous requirements. You will have never seen fronting like you will see now if this is kept as a priority element. The targets for black and black women owned companies are stiff but give it time and they will be achieved. And then supplier development. Too limited. Why not on both sides of the supply chain. As it is an ED beneficiary just needs to get on the supplier list and you are good to go. Sell one pencil and they are on and a supplier. If you don't look at this then you will find that every small business is suddenly 51% black owned and you won't be able to police it. Think OUTA here.
   5. SED – no changes

I don't think it's equitable and fair that you have decided to exclude black owned businesses from contributing to BEE because they turnover less than R50m. The strategy document speaks of inclusivity. We are in a deep hole here, Zoomer has put us here along with his friends and a little help from a depressed world economic climate. Every company that is not an EME must contribute.

I know that you don't care, but section 217 of the constitution is going to hit you very hard. Just wait until state procurement becomes unaffordable because black owned companies are knowingly fronting for white ones. As Leon Louw once said to me, every cent the government spends on empowerment is taken from some budget that should benefit the people. If you want to build the country then start listening to those companies that are trying to get by whilst having to negotiate your red tape.

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Heaven forbid that Bolshie Bob's department provide us with information that is clearly thought out, properly researched and executed according to the constitution. I doubt whether our justifiably lambasted commie believes in heaven, that's where he and I concur, otherwise I think he's useless. Where was I?

There is a big brother watching us from London, goes by the name of Peter Attard Montalto. Peter is Nomura's emerging markets economist. He is quoted very often in the South African business press. An article on the fantastic Biznews.com website listed a number of Montalto's concerns about South African, Zoomer and Pravin. Here's what he had to say about Bolshie Bob's folly

Montalto said they were surprised to find that the business community is becoming increasing dissatisfied with BBBEE. "This is something of a surprise – for so long any concerns about its structure or costs were buried and seen as simply the cost of doing business in South Africa. "Now, however, the costs from the ownership requirements in structuring BEE deals are being recognised as excessive, and the focus on ownership over true transformation of local communities, junior employers and junior managers is seen to be misdirected."

Of course my standard response is "why aren't they doing something about this?". Why must it always be this privileged white boy residing in the suburbs of Johannesburg who kicks up a fuss and moans. Perhaps they are doing something about this. But if it's through Pravin, Bolshie will have wreaked a mountain of havoc before Pravin tells him to wind his mechanical neck in.

There is a pattern that emerges within all government departments. It's a known fact that other than Treasury and Derek the people running and working in these departments are a little (read totally) out of their league. Ignorance under these circumstances is not bliss, it's downright fucking dangerous. Id est

THE Department of Communications has come out in defence of the Broadcasting Amendment Bill despite opposition objections that it gives the minister sweeping powers and would not pass constitutional muster. Acting director-general Ndivhuho Munzhelele said on Tuesday in Parliament that the department was confident the bill did not violate the Constitution, instead it would improve the functioning of the South African Broadcasting Corporation's (SABC's) board, a bedrock of instability.

I could be wrong (but I'm not – to quote Don Henley) but I suspect that they went ahead with their bill placing an incredible amount of faith (in Faith) to not interfere in the board (like she hasn't done that yet). Their standard argument is "it's constitutional, if you don't agree prove it".

Repealing codes in a willy nillly fashion, promulgating codes in a willy-nilly fashion is the same. It's constitutional, fucking prove it isn't. The time has surely come to prove it isn't

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They’re repealed I tell you they are REPEALED. Giving notice means it happened yesterdie

But we don't really want to follow the process. Perhaps we don't know what the process is.

The DTI writes (but not to me)

From: Lindiwe Madonsela [mailto:[email protected]]
Sent: Friday, February 26, 2016 4:11 PM
Cc: Jacob Maphutha <[email protected]>; Joseph Melodi <[email protected]>; Liso Steto <[email protected]>; Salamina Madisha <[email protected]>; [email protected]; [email protected]
Subject: RE: FW: Statement of Clarification - Repeal of Sector Codes

 

Your email has reference.

Please note that the interpretation of the processes in your initial email is not consistent with the B-BBEE Act and Codes of Good Practice.

Firstly, the notice issued on 17 February 2016 to repeal both the Construction and CA sector codes does not refer to a process to repeal, but rather informing the public of the actual repeal. The words "give notice to" does not refer to a future date. Following the process as of 1 May 2015, one would note that sufficient notice on the repeal of sector codes not aligned was provided. Firstly, the general notice issued on 15 May 2015 referred to a consideration to repeal sector codes not aligned by 30 October 2015. Secondly on the 3 November 2015, the public was informed that sector codes not submitted for approval by 15 November 2015 will be repealed. The final step taken by the department on 17 February 2016, was to notify the public of the sector codes that were repealed.

Further, section 9 (5) refers to issuing, amendment or replacement. This applies to issuing of new codes of good practice (the Codes),including sector codes as well as amending existing codes (including sector codes). The word "amend" refers to changes effected in the actual codes, whereas "repeal" refers to abolish/cancel/nullify. The two terms are different and should not be confused. When the 2007 Codes were being amended and subsequently gazetted in October 2013, measured entities continued to be measured on the 2007 Codes because they were not repealed but being amended. The construction and CA sector codes were repealed and thus cease to exist. The 60 days commentary process is not applicable to the repealing but issuing, amending or replacing. Nonetheless, sufficient notice was given dating from 15 May 2015 even though it was not specific to which sector codes.

Furthermore, reference to "remain valid until amended" means that measured entities within those sectors continues to be measured in terms of those sector codes until the actual sector codes are amended. For example a measured entity in the FSC will apply the 2012 FSC codes until the amendment process is finalised and a section 9(1) FSC which is aligned to the amended generic codes is gazetted. The 17 February 2016 notice did not mention measurement periods or financial period. The clarification statement issued on 22 February 2016 remains the Departments only clarification.

In addition, please note the attached Notice gazetted on 15 May 2015 on the implementation of sector codes aligned to the amended generic codes.

Trust that this is in order.

Regards,

Lindiwe

AND THEN I WROTE

Dear Ms Madonsela

Your email below (now above) refers.  I would respectfully request that you consider the following:

1. Up until the point that you "repealed" the two codes they enjoyed the exact same legal standing as the revised BEE codes or any code issued under section 9(1) of the Act.  Summarily repealing a code and then expecting those entities to follow another code that they may or may not be aware of is an application of retrospective legislating, something that our constitution and the rule of law frowns upon.  It is not legally reasonable for those entities to have considered using your revised codes when they were not applicable to them.
2. A repeal has to be regarded as an amendment because the public have a right to have a say in how you go about your administrative duties.  Your administrative action is similar to the following example.  Creating a punishable activity from a certain date that was legal up to that date and then prosecuting transgressors for transgressions before that date
3. I put it to you that legally, these codes are still in effect and have not been repealed

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And they have not yet responded – not that I expect them to. The logic and argument is pathetic. I love Lindiwewillrepealandyouwillsuckitupandcomply's "The words "give notice to" does not refer to a future date" argument. One definition of the term "give notice" comes up as To announce one's intent to leave a job; to inform an employer that one is leaving. This needs to be tested – common understanding of that term is that you are alerting the public about what you plan to do. You cannot allow an administrative action to be this vague. It's a simple thing – the codes are repealed and the process to repeal has been followed. This process has to be fair and reasonable. Take a look at this argument presented by Sean Lakey who appears to be an advisor to the Construction sector council

1. The rule of reasonableness and fairness applies – Was the envisaged action expressed in the 1st attachment as of 30 October 2015, whereby the implication would become effective as of 16 November 2015, delayed by circumstance and finalised on the 8th December 2015 in part, the completion for all concerned came into effect 17 February 2016?
2. (1a) To whom/which part of the concerned sectors constituents was this communicated in due time?
3. (1b.) The argument is – Do you as Government have the right to decide unanimously and irrevocably a decision beyond granting any business entity the opportunity to show objection/adherence to what you propose.(60 days)
4. Was an entity granted sufficient time to alter its operations from the Construction Sector to DTI requirements in the current financial year to meet such as per your gazetted notice of 17 February 2016?
5. Minister Rob Davies must provide the facts as to why the Gazetted document was not processed by 16 November 2015.
6. What legal basis did the first attachment above have, verification agencies would only accept a gazetted notice to this effect.

We have a right to fair administrative action. This has to go on some sort of review.

And why have I heard nothing from the CA Charter Council – they have the most to lose. 

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