Paul Janisch

When are you legally obliged to implement a BEE programme? Public sector is

It's not like me to post something that may agree with the BEE Commission.  Here's an article I found that is interesting. I'll post it in its entirety

This news may come as a surprise to many private companies operating in South Africa. Black economic empowerment is a voluntary process. It could never be made mandatory because the constitution would never permit it. It’s just become such that it’s now almost impossible to do business in this country without a BEE certificate.

However the broad-based BEE codes make it absolutely clear that all organs of state and public entities are “measurable under the Codes.” Strangely enough it is these same entities that have barely paid any attention to a full scorecard. They certainly are aware of the procurement requirements but little else.

The uptake of compliance is so dire that that the BEE Commission, in their National Status and Trends on B-BBEE Transformation Report 2021 observed that of the 326 organs of state (including municipalities) only 82 submitted their BEE report to the commission. Something that the BEE Act compels them to do. Interestingly of these 82 entities, one third of them were non-compliant.

Rudolf Rautenbach of Ownershield, a BEE solutions company observes that there could be greater consequences for these entities if they do not comply with the BEE Act. “The BEE Commission might not appear to carry much weight in this process, but the Auditor General may flag this as being a non-compliance in that entity’s overall governance.” He adds that, “many municipalities are far behind on service delivery and need to show their constituents that they are making progress towards a good governance track record.”

Why do so few organs of state submit reports and many of those that do can’t show much in terms of BEE compliance? Rautenbach suggests that they simply don’t know what to do. “BEE compliance in the smaller towns is almost non-existent because the municipalities themselves are not leading by example. This is a simple education issue. “

Observing that BEE Compliance is complicated, Rautenbach argues that once the many principles are understood then it’s a process of implementing what needs to be done on an annual basis. “We often come across municipalities that tell us that their management is completely black and that they only target black-owned suppliers and service providers. Our response is that at best they may have achieved less than 40 points on the scorecard and remain non-compliant.”

On the other hand Rautenbach says he’s come across municipalities that have developed an understanding of compliance and in the process helped build the local economy through their enterprise and supplier development programmes. “I have seen certain towns creating youth empowerment programmes under the socio-economic development element.” All of this adds to a social cohesion that appears to be sorely lacking in this country at the moment. The solution appears to be education and guidance. “The benefits are enormous to each municipality, we’ve found that our day workshop has started a thought process that has resulted in the beginning of a process that has steadily improved year on year.”

To find out more about the Ownershield BEE Courses for Municipalities email [email protected] 

Here's the course and costs.  It's a first ever

awdoz flexes her muscles, but has she chosen the correct opponents?

The Broad-Based Black Economic Empowerment (BBBEE) Commission is investigating a number of companies and entities for allegedly violating the BBBEE Act. Major names among those under investigation include Netcare, Nokia, MTN, Eskom and the South African Social Security Agency (Sassa). 

Also to be investigated are six verification agencies.

The suspected violations relate to BBBEE ownership structures and noncompliance with the codes of good practice for the verification process.

The investigation into MTN is aimed at determining whether its Zakhele and Zakhele Futhi BBBEE schemes meet the requirements for black ownership in terms of the codes of good practice and comply with the act.

Nokia Solutions and Networks SA is to be investigated to determine whether the BBBEE ownership transaction involving its employee trust and Sekunjalo Investment resulting in 26% black ownership and the subsequent change in black ownership, which resulted in 31.28% black ownership by Sekunjalo, complied with the act.

From BusinessLive

 It has been observed before that the poor bee commissioner, one awdoz (that's zodwa to her friends) is just not taken seriously.  Here she comes with both guns blazing with her gallant posse of BEE purificationists providing small arms cover.  This will get the people to take notice, and I think this is all it is; it's an attempt to get people to take her seriously.  Or perhaps it's just another enawz petulant fit.

But - has she taken on the right opponents here? The answer is no, my phone has not rung this much in years.  The industry is now pissed off.  The first issue is that she can't publicly announce that she is investigating companies - she needs to publish the results of an investigation.  She's tarnished the reputation of some very serious companies, both verification agencies and listed companies (more on this later).  She apparently brought the much maligned KPMG  in to conduct an investigation of some verification agencies; although my sources suggest that KPMG is no longer going to do this.

People are talking lawyers, talking to lawyers, lawyers are talking to people.  And this is just the beginning.  Many years ago the Employment Equity Commission would go on a naming and shaming exercise every October - they would claim (as they are once again doing but not naming the actual companies) that certain very high profile companies were non-compliant with the EE Act.  These kinds of utterances have the potential to mess with investor relations, both locally and internationally.  There was a certain court case that the Department of Labour lost when they tried to investigate a transgression.  This is where awdoz is inevitably headed.

I'm not going to go into the full list of investigatees but suffice to say a few are listed on the JSE (I think the likes of Evkom and SASSA will just fob her off), the one that is the most sensitive is MTN.  MTN has had a torrid time in the last few years (other than the fact that they are ripping me off for airtime).  They were properly hit by the Nigerians - which couldn't have done their share price any good.  Now they are being investigated for non-compliance with the BEE Act (more specifically Determine whether the MTN Zakhele and the MTN Zakhele Futhi B-BBEE schemes meet the requirements for black ownership elements and comply with the B-BBEE Act.)   This does not bode well for MTN, they don't need this negative publicity.  Neither do the verification agencies, three of them I spoke to today have all said clients are phoning them and asking for clarity because they don't want to be associated with them.  And this is based on allegation - something awdoz is not empowered to do.

Here we have awdoz who really has set the cat amongst the raptors - raptors like to eat cats.  This will inevitably be awdoz's Mkhwebane moment (her name is in uppercase because I believe that she will see the error of her stupidity and start doing her job without fear or favour - as the cliche goes).

BEE Commissioner (Ms Zodwa Ntuli) you are out of your league here, your opponents are not scared to go to court and vilify you the way the high court lambasted the public protector.  You obviously believe that bolshie bob would support you, and he probably will but that's not enough.  You need the support of those entities that you are supposed to be policing - you've gone about it the wrong way from the start, there'll be little or no sympathy when this ends up in court and I suspect you'll end up paying for it.  The word on the streets is that some big players are very upset,  the smaller players are furious.