Paul Janisch

Getting to 51% black ownership using the modified flow through principle

The person who thought of this scheme is cleverer than me, I think I need to apply for apprenticeship in her office (if it is in fact a her).  This structure was explained to me about a year and a half ago by a guy who had got it from someone in Bloem.  It is an application of the modified flow through principle which needs to be explained
Modified flow through principle (MFT)
The modified flow through principle applies to any BEE owned or controlled company.  
"BEE controlled company" means a juristic person, having share holding or similar members’ interest in which black participants enjoy a right to EXERCISABLE VOTING RIGHTS that is at least 51% of the total such rights measured using the flow through principle.
“BEE owned company" means a juristic person, having share holding or similar members’ interest, that is BEE controlled, in which black participants enjoy a right to ECONOMIC INTEREST that is at least 51% of the total such rights measured using the flow through principle.

It follows that a BEE owned company is placed higher in the ownership hierarchy as this company enjoys both black voting rights and economic interest.

Yes but also note…..
A 51% black owned entity must enjoy 51% of the voting rights and economic interest AND have earned all the points for Net Value. The simple way to view this is that the shares must be paid for, the formula tends to favour this approach.

We know that for once in the ownership chain, if the exclusion principle is not used (I'll let you trawl through bolshie's bollocks to figure what this is), the 51% black owned may be viewed as being 100% owned.  

Back to the diagram.  I think this structure is best suited for businesses that turn over less than R50m and have few assets in the company, in other words the assets reside in a vehicle outside the company, a thing which is very commonplace in many businesses.  The reason why I say this is that the rules state that you cannot claim the 51% ownership until all the net value points have been awarded.  I'll talk a little bit more about this earlier.

Let's say the proverbial measured entity (PME) needs to get to that holy grail of ownership which is 51% for now, but watch out for gross arbitrariness from the incompetently run state owned entities that might change this level on a whim.  This is the route they might follow.

1. Establish a company called Holding Company.  Shareholders of this company need to be 51% black and the balance held by the shareholders of the PME.  If a trust is established for this purpose the beneficiaries must be 100% black as defined.  If it is any less than that you can use the MFT to make sure that Holding is 51% black owned but the MFT ends there.
2. Holding company buys 51% of PME.  The original shareholders hold 49% of PME.  
3. The application of the MFT says that PME is now 51% black owned, subject to the conditions of measuring net value.

There you go.  Simple so far.  There are technicalities that you need to consider. 

1. The true definition of 51% black ownership means that the shares must be paid for.  Holding company is a start-up and worth nothing, there is no reason why the black shareholders should be indebted at that level.  In fact Holding does nothing other than own PME or any other company. It doesn't need to register for VAT and it doesn't trade.
2. This also applies to the ownership of PME.  The codes say that in order to claim 51% black ownership all the net value points must be awarded.
3. On the issue raised by a and b, my good friend David says the shares should be given away.  If the company has no assets then it's not worth that much anyway.
4. Note that the DTI declaration states that the PME is 51% black owned.  See the definition of black owned above, if the shares are indebted in any shape or form then that is quite possibly fraud.  There's nothing stopping anyone checking a little deeper to take a look at this.  I would go with what David suggests here.  Give the shares away to Holding.
5. It's quite difficult for anyone looking at your BEE declaration to know that the modified flow through principle has been used.  

This structure is code-worthy.  It's messy and requires the management of two companies but it gets you to that level 2.  Now the only issue is the incompetent SOEs insisting on BEE certificates when affidavits will do. As an aside - surely I don't need to precede SOEs with the word incompetent,  it's implied.  Our dear BEE Commissioner sis zod has addressed this in her surprisingly well written the Whistle.  I'll let you find it and read it yourself.

And on a completely un-related note, other than SOEs and their predilection for state capture, this document is a discussion of the guptas, zuma and bell pottinger.  Read it and puke.

And I am marching tomorrow.  I hope you do too.

 

 

 

Related articles

Ownership uber alles - can anyone confirm this?

Transformation is out - this is about survival. Compliance is the way

It's the 31st of March 2017.  zuma has fired Pravin and we wait and see what happens now.  zuma's radical economic transformation policy has exactly nothing to do with empowerment. It's about gupta crony capitalism.  Why then should you concern yourself with an empowerment process that rampant racists like jungle jim (manyi) will discount as either fronting or white monopolist expedience.  I'm not discounting the necessity of empowerment, what I am saying is that it is not endorsed by the zuma regime, a regime that now operates entirely independent of the anc (the party will be written in uppercase when they show a little balls).  Back to empowerment - South Africa cannot afford not to empower the disempowered.  It is an economic and social necessity, but until government (under zuma) plays its role as a partner in this process I will advocate compliance over empowerment.  Tread water with me here.

Compliance differs to empowerment in intention.  Empowerment requires an intention to make a difference, it's more hands on and probably more meaningful.  Compliance is a measurement process.  It's squeezing the maximum number of points out of the least amount of money.  It's selfish in nature but does produce results and ultimately does contribute to empowerment.  It's not as easy as mere compliance, bolshie bob's revised codes have made a gallant attempt to push empowerment.  The SANAS verification process is both onerous and thorough (for now) which makes compliance a little more difficult.  But in our favour, the codes (all of them) are so badly written that it comes down to interpretation.  Just make sure that you know what you are doing and have your justifications ready.

Interpretation 

When interpreting the codes you must never lose sight of the founding principles.  There are a number of them but these are the significant ones.

BEE codes

• substance takes precedence over legal form.  The fronting clause.  It refers specifically to ownership but has a broader application.  This clause permits those who doubt to dig deeper than the legal structure of a deal.  Classic (and patently stupid) fronting puts an unsuspecting person on the shareholders' list or as a director. That's the legal status - the substance states that this person is not that in fact.  However there is a converse. Let's say you do your 51% deal and you sign the shareholders' agreement, create the trust, or even sign a MOU; but it takes CIPRO months to reflect these changes.  The substance of the deal is that it exists - the legal form has not happened yet.
• any reasonable interpretation (of the codes) must be consistent with the objectives of the Act and the B-BBEE Strategy.  Note the words "reasonable interpretation" this is a subjective measure.  SANAS or the verification agency might not agree but must entertain that interpretation if it is consistent with the Act and Strategy

 BEE Act

The act lists its goals (amongst numerous others) as

• promoting economic transformation for meaningful black participation;
• substantial change in the racial composition of ownership, management structures, skilled occupations

 BEE Strategy

This is a really good document that predates the Act.  The dti refer to it often but it's not easy to find. So I've posted it here.  My good friend Chris van Wyk tells me that it's not an official document even though it's referred to often. Perhaps Chris can explain that in more detail.

• BEE is broad-based.
• BEE is an inclusive process.
• BEE is associated with good governance.
• BEE is part of our growth strategy

 Notice the second principle.  It's inclusive.  Not according to bolshie bob and his crafty crew of drafters.  You see empowerment is a white problem - not your problem if you are black and turn over less than R50m.  I've said this before.  I wonder if jungle knows that white monopoly capital is being made to pay for everything as well. 

The next post will discuss the modified flow through principle and how you get to 51% black ownership without actually doing it.

 By the way, this is what I am wearing today

White monopoly capital, zumatrump, entitlement, sulking and crystal bollocks

It seems as though it'll be more of the same as last year, only worse when you throw trump into the equation.  What a perfect pair zuma and trump (henceforth lower case- altwee) are, if you combine them you have a perfect despot.  zuma's agenda for this year is divert the public's attention away from the complete idiot he is (I really wanted to write fuckhead - but that's a bit too real)  to the new White Monopoly Capital moniker.  A very predictable move from a man who, like mugabe back in the day finds himself in the far corner of the Saxonwold shebeen holding up the walls.  

There are threats that zoomer is going to re-shuffle his cabinet and get rid of Pravin.  I can't see this happening for a variety of reasons.

 Firstly, when zoomer fired Nene a delegation of very powerful people arrived at his kaya and told him to remove des (all three foot of him, by all accounts a few inches taller than hlaudi) and restore Pravin to the job.  A move that put zuma firmly on the backfoot.  It strengthened civil society's resolve to protest against the doos.  The result was brave people like Sipho Pityana starting the Save SA movement.  zuma's buffoonery and the ANC's blind loyalty to him resulted in the very poor ANC performance in the August 2016 elections.  Since then the voices calling for his removal are louder than ever.  We have seen members of his cabinet call for his removal (they call it stepping down which is what honourable people would do - zoomer is a doos with a standard three, he is not honourable).  100 CEO's have recently pledged support for Pravin, a distinctly anti-zoomer move.  If zuma fires Pravin, the delegation that marches to his kaya door will be much more powerful - they will force him to retract the dismissal and make him even weaker.  It would also split the ANC into a number of pieces.  Right now the ANC needs to keep its shit together, a split ANC could result in the 52% splitting up and the DA becoming the dominant party.

Secondly, Brian Moleefy-suburb-of-Saxonwold-shebeen-frequenter has no credibility in the eyes of business and the world.  He is not a viable option for finance minister.  His love of the guptas and the stories now coming out about his questionable procurement practices in a variety of state entities have destroyed his reputation.  A Pravin master stroke.

Thirdly.  It's only the zoomer faithful who believe him now.  He has no credibility anywhere - hell he couldn't risk being sent to Davos.  He will manipulate underneath - videre (I should) Koko's love of nuclear.  Not forgetting the yooofleeg and the wimminsleeg.

I ambitiously hope that zuma will be removed by the end of the year.  With people like Pityana leading the charge the possibility remains, but with short fingered morons like trump in the US I can't be sure.

And this year

• The revised codes will start infiltrating the economy. I was right all along, they are shocking, unrealistic and unviable.  But we South Africans are a resilient bunch.  I'll figure them out.  I've already got the measure of skills development, procurement is next on my list.  What I do hope to see is that corporate South Africa comes to realise that the ridiculous pressure they are putting on smaller businesses to retain levels is unreasonable.  Here's an analogy.  

We accept that Wade van Niekerk's world record for the 400m is 43.03.  SASOL, amongst many others, is insisting that all their suppliers (athletes in this context) run below 50 seconds.  The only problem is that the distance is now 500m.  

• Scores have to be allowed to settle.  I am unrealistically hoping that Rob drops his priority element ballsup because it works so negatively against those trying to make an effort.  
• Expect much fear and many courses.  Everyone will tell you how you have to spend muchos cashos to get the points.  Wait for my course - you'll find the points within your company and still transform it.  
• The time for companies doing all the ED/SD work for their beneficiaries has to come to an end.  Successful black speaking companies will target their benefactors and will add proper value to their benefactors.  They will succeed in the long term.  Part of of their programme will be to provide those companies with the necessary documentation that is required by the overzealous SANAS verification agencies.
• On the subject of verification.  The shit has hit the fan.  Not that we've felt it yet.  IRBA certificates can no longer be issued.  The number of SANAS agencies is not growing fast enough.  Bottlenecks are imminent.  And the dti, hands numb under the bum
• Expect more and more arbitrariness from the parastatals.  I don't know if there is a single one with competent management.  We know that Eskom and SAA are scraping the barrel. In the latter's case, the barrel was stolen years ago. Anticipate that your carefully constructed 51% black owned company will be rejected because they now only want 56.34590125% black owned businesses.  It's coming I tell you

The future of empowerment legislation is..............?

Secure.  The ANC needs BEE and it must fail.  It cannot succeed under an ANC government because then they would have no one to blame for their ineptitude. Why do we have revised codes, simple, companies were making great headway.  Oh no, they were successful at this transformation lark, we must now show that they are racist by making compliance harder.  How can you blame white monopoly capital for your failures when it's actually transforming.  Here we have a government that loves your tax money but feels the need to remind you how racist you are whilst they plunder the coffers that you filled.

And if the DA takes over.  They cannot allow this policy to lapse.  If they do they will lose the black middle class.  It will continue in some guise but will be designed for success.

And if the EFF takes over.  We're all EFF-ed.  

Happy new year. Good luck.  Send me mails, hire me to solve your problems, book me for talks, just don't invite me to your Christmas parties.

And I leave you with a delightful song about the summer to keep your spirits up

14 - Die Radiators - Somerlied

 

 

 

Related articles

Workers' day blues

ANC suggests Eskom sells equity to pension funds er..... isn't this a broad-based ownership scheme

Zuma promises more changes to boost BEE - now it's changing the PPPFA

Speaking to the Black Business Council, which has signaled strong support for Zuma, South Africa’s president said that the Preferential Procurement Policy Framework Act will be changed “to continue the quest for a transformed economy”. More people must be brought into the net to benefit from government contracts, he said.

via www.biznews.com

We've heard this before.  Remember how seriously Dud took the doos's obiter remark about set-asides in his 2015 state of the nation (of no fixed) address?  I think this is another platitude from the mouth of a moron who no-one likes nor respects (other than Hlaudi of course).  As Jackie Cameron wrote

The president’s words will be music to the ears of the tenderpreneur brigade, though not so sweet to the small army of entrepreneurs who aren’t black but play a meaningful role in job creation and economic growth and are already doing their bit for BEE. An amended public procurement bill is set to be released for discussion next month and tabled in Parliament early next year.

I can't see this happening.  Zuma lacks the political clout to do it.  Perhaps he is prodding Treasury to see what their reaction will be.  Perhaps he thinks that the useless and tailcoat-riding BBC will start lobbying to get rid of Pravin because he's not going to agree to this.  Thinking about it, this is probably what Zuma is doing. The strategy now is to create huge dissatisfaction with Pravin, specifically amongst those who are not competent enough to provide services to the private sector and have settled for government work that worries neither about quality nor price.

Now he's attempting to placate the completely irrelevant jungle jim, who is threatening to go to court (yeah right) to get the PPPFA scrapped.  He's saying the regulations that Treasury published earlier this year are going to be promulgated at the end of this year as an interim measure, and then they are going to change the Act (not repeal it jungle).  Here are the words of the thickest human being next to Hlaudi.

In the past five years as part of advancing BBBEE procurement, government amended the Preferential Procurement Policy Framework Act or the PPPFA Regulations to provide for BEE preference points. We thought this would work and would make an impact. However, you pointed out that it does not work.  We are now aware of the shortcomings. We agree that the preference points system prescribed in the PPPFA is rigid and is not responsive to government objectives.

Due to the shortcomings, the preferential procurement regulations have failed to substantially re-shape the skewed ownership and control of the South African economy. It is the intention of government to ultimately repeal the PPPFA and its associated regulations and introduce a more flexible preferential procurement framework that is responsive to government objectives. 

In this regard, the Preferential Procurement Policy Framework Act will be repealed by the Public Procurement Act. The Public Procurement Bill is now going through the different government stakeholder engagement processes before it is tabled in Parliament. This is targeted for early 2017. I trust that the BBC has made its inputs to the National Treasury.

In the interim, government is to produce regulations that will improve the PPPFA to make them more responsive to the economic transformation imperatives.

One of the main changes contained in the proposed new Preferential Procurement Regulations is the introduction of a compulsory sub-contracting clause.

It will be compulsory to sub-contract a minimum of 30% of the value of the contract for all contracts above 30 million rand, to small and emerging enterprises owned by the women, youth, black people or persons with disability. The intention is to finalise the Preferential Procurement Regulations for approval during October 2016, and for these to be promulgated by 1 November 2016.

Will this actually materialise? Zuma is a lame duck, it won't happen.  

 

Related articles

Ownership uber alles - can anyone confirm this?

Something very sinister is happening here

Draft PPPFA regulation disgust (discussed and cussed)

Regional and national EAP, Bolshie Bob content

[E]mployment opportunities are accessible to people only where they live.  The objective of the EE Act is not to induce racial migrations to accommodate the statistics.  Its objective is accessibility of employment opportunities and it achieves that objective only if it takes account where applicants for the posts are located.  Statistics that serve as a tool for that purpose will be statistics that reflect the reality of the population, and the reality is that the races are not distributed uniformly throughout the country, which is not reflected in the Department’s Plan.

The Employment Equity Act has since been changed and it no longer requires an employer to take into account regional demographics when devising EEP targets – it merely allows it to do so if it wishes. It may be that this amendment is unconstitutional because it effectively encourages migration of people far away from their families and communities, thus containing echoes of the apartheid migrant labour system. But a future judgment will have to determine whether this is so.

via feedly.com

So sayeth Pierre de Vos in another of his insightful posts.  As those who are scholars of Rob's Folly also known as Bolshie Bob's Botched Borscht will know that our Stalinist deludinist has found it fit to include the economically active population (EAP) as a target for his racially representative nation. As we have come to expect from the brains trust at the iDioTIc, the document is big on ideology and short on the most basic clue as to how to implement it.

The ConCourt has come to our aid when it comes to regional and national EAP.  You can use both.  The ConCourt referred specifically to an EE plan.  But I feel confident that we can extrapolate this conclusion into the meat of any BEE scorecard scenario.  But you have to read this plan into the IMF's David Lipton's recent speech on the state of the South African economy.

But there is something else going on that has developed with the evolution of the economy. This involves issues that I know are very familiar to you: infrastructure bottlenecks; skills mismatches in the work force; regulations that stifle competition and entrepreneurship and keep that one-third of the labor force unemployed or too discouraged to seek work.

The end result is that a huge part of the labor force is left on the outside looking in, undereducated and with no opportunities for advancement. I’m told, for example, that there are township youth who not only cannot find work, but who grow up without knowing anyone in their circle of family and friends with a job either!

The formal economy is not absorbing them, nor are they able to strike out on their own. There is a crucial structural issue at play here: those included and successful in the advanced economy — large businesses, banks and unionized workers — maintain entry barriers against their potential competitors — small and medium-sized enterprises and the unemployed.

These paragraphs actually refer to the 79% of the EAP that the Prison's Department wants in its employ.  Lipton is telling us that the government has in effect let these people down, both through their historical neglect and their ongoing burdensome policies. And once they have washed their hands of these people by pushing them out the school system the private sector is expected to absorb them and make up their educational shortfall by blowing humongous amounts of cash on skilling them, 6% of payroll to be precise.

We are being taken for fools, policies created by buffoons who are not required to understand how an economy or a spaza shop runs.  This doesn't specifically mean that we can point fingers at Zoomer and his band of incompetents. We are part of the solution but government needs to make the first move - and that move should be axing Zoomer and his cabinet without a pension.

And no, I don't feel better for writing this.

 

 

 

In which I praise Rob Davies – and racism gets mentioned

The reader may have thought I have lost my mind. A post praising Rob Davies would be shorter than this post (my most widely read post I stress). I won't use the term racist when it comes to Bolshie Bob, because he's not cut from that cloth but what I will say about him is that I think the architects of apartheid would be most impressed with him. Can you imagine if they had found a black man who was so hell bent on destroying black people as Bolshie Bob is with destroying white people.

Anyway, let's get to the crux of the post. This thing called RACISM and how the ANC government would be nothing without it. Zimbabwe is the same with colonialism and Mugabe's disdain for Breetawn. When you are a government made up of the most corrupt and inept people you need a scapegoat and this scapegoat is the SCOURGE OF RACISM, other terms for it are COUNTER-REVOLUTIONARY (although this is often levelled at black people who speak out against the government) or ANTI-TRANSFORMATION. The latter term is being used by Dud Miyeni-millions-to-plunder-from-SAA. It's a thin veneer of an excuse for killing the national carrier (as those in government love to call it).

The emphasis on fronting has a similar hollow ring to it. Please don't think that the so-called BEE Ombud/Commissioner is going to listen to your constructive commentary on the various iterations of their un-implementable codes. She's not interested in the fact that you just don't find Xhosa radiographers in Pofadder. She's only interested in hearing complaints of fronting. I have this completely untested suspicion that she will be more amenable to allegations of white people fronting by black people and not the other way round. It plays back into the racism argument – as John Robbie so correctly (my arse) observed "only white people can be racist because it's all about power." Whatever that means. But, he hastily pointed out, black people can be bigoted. How's that – white people can be both, and all at the same time. Such talent.

And so this country can never move on. It can't move because the ANC doesn't want it to. If it drops the perennial racist allegation then it has to take responsibility for its own mistakes and fuck-ups, Jacob Zuma being the most colossal of the latter.

This was going to be a longer post – but there's no hope here. Whilst white people live in this country racism will thrive, irrespective of whether they are racist, bigoted or not. That is unless the ANC actually wants to make a difference to lives of people in South Africa. Let us hope that Rob doesn't scare off all the white taxpayers too quickly - because when they go the BEE Commissioner will suddenly be without a job.

Related articles

Piercing Zuma's bubble: Mantashe and Gordhan's grim tasks on State Capture and Nkandla

How can a leader of any country be so derided by one of the most influential publications in South Africa

Has Treasury been captured by the black business lobby?

The hashtag generation and how I am going to jump on the bandwagon

This is in spite of the fact that I am Twitter illiterate but what the hell, so is our esteemed Persecuted president (he's just plain illiterate – see the picture below). How about #beeecodesmustfall or perhaps more accurately #revisedbeeecodesmustfall. Me being the Twidiot I am, I have no idea how to create such a #; these # are sharps in music and E has five of them. This is a post I've been wanting to post for a while, there's been too much mind altering turmoil over the last few months that have occupied my time. I have been speaking to a few people who might have attended the last few meetings with Pravin and Zoomer. From what I can figure out, the ANC is speaking to business but will not concede everything. The story goes that certain ridiculous Rob-designed policies aren't going. This makes sense, we all know that the ANC has fucked up the economy, the ANC knows that it is fucking up the economy and labour wants us to fuck up the economy even more. It's a negotiation, the ANC needs to save some face and business needs to create an environment conducive to bringing the economy back on track. Of course I want business to tell Pravin that Rob's new codes are going to kill whatever transformation the ANC envisaged. Perhaps they have but I would imagine it would be a low priority. If your boss is one of those who gets to talk to Pravin here is a little speech that they can memorise.

Dear Pravin

Re: #revisedbeeecodesmustfall

It is unlikely that there is going to be a violent confrontation, business people are not ones to march to Parliament and throw faeces to make their point. This revolt is unlikely to make the front page of any non-Gupta owned newspaper and will never make it onto ANN7. So we have to use whatever medium that we can (which right now is some white BEE consultant's blog). We appeal to you in the name of logic here, failing which you might just expect some form of legal action (not from the white BEE consultant, he tried it but the uptake wasn't that great). The very respected Minister of Trade and Industry, a Dr Rob H Davies, was persuaded by a number of people in the pre-firing Nene period that transformation was JUST not happening. To this end they recommended a number of very dramatic and expensive changes designed to "incentivise transformation" in the words of the Bolshevik Rob Davies. These dramatic and expensive changes are only applicable to those who own businesses who are not black as per definition. In summary this is what the revised codes look like

• Black owned businesses (from 51% to 100%) who turn over less than R50m are automatically level 2 or 1 contributors because they are black owned
• The scorecard itself uses negative marking for all those companies who lack the ownership and turn over between R10m
• The entry level to get onto the scorecard is now 40 points
• To get to those 40 points a company needs to dramatically re-orientate their business toward an empowerment agenda, and we know what happens when you put empowerment ahead of business sense, Eskom and SAA come to mind immediately
• The training requirement is so onerous that it is unlikely that any company could comply. If the minister (Pravin) wishes to get an idea of the costs then perhaps he could look here
• Rob has created a requirement known as "empowering supplier" that is so badly defined and ridiculous that it promotes vagueness.
• Those who benefit from the correct level of ownership can derive up to a 20 point advantage over their not-so-black competitors in state procurement
• It is very likely that the DTI pushed through these codes without the minister applying his mind (rather like his boss)

That is all very well but perhaps the minister (not Rob) would like to consider the following

• The onerous nature of these codes will have the effect of white-owned companies eventually running out of patience and they'll stop trying to compy
• Fronting will go through the roof because the larger corporates are going to insist on it
• The cost of state procurement will escalate substantially. This happening at the time where government maintains it needs to cut back on its expenditure,.
• A constitutional challenge will be launched against the codes. There are so many grounds for such a challenge but I think section 217 stands the greatest chance of success. If Hulme Scholes' challenge against the mining charter is successful then the floodgates will open.
• They threaten the very nature of empowerment. If the codes fail then you will never resuscitate this policy – the ANC is weak and it needs successes now. Transformation failures will no doubt be used as an electioneering tool but jobs will be lost and the opportunity to fix the country will have passed.

Pravin, you have more sense than Rob the Bolshevik, you can change things. I can assure that there is a genuine desire to transform the economy, Rob's codes are not the way to do it.

That's it. I'm in Cape Town next month for a few meetings, if anyone would like to meet for a cup of coffee or something like that I'd like to meet you.

Related articles

How can a leader of any country be so derided by one of the most influential publications in South Africa

Workers' day blues

And then Zuma fires the Minister of Finance

Reminds me of the old joke – and that's how the fight started. To say I was not livid when I heard this news would be an understatement the size of the Christmas myth. I was absolutely pissed off, more than pissed off, I was completely fucked off. We will speculate forever as to the real reasons behind Nene's dismissal, Zuma will never tell. But it seemed pretty obvious that Nene told Dud Miyeni to clip her wings, she ran to number one (she really should run a lot more) and he solved the problem the way he had done before. I'll let Alec Hogg take up the story

Here's a story I was told by someone who should know about these things. Three months ago, he says, then Minister of Mines Ngoako Ramatlhodi was asked by one of Zuma's sons to "intervene" after a mine owned by the politically connected Gupta family was issued a Section 54 notice. These notices are powerful bureaucratic weapons, enforcing the closure of the entire mining operation until safety concerns have been satisfied. Ramathlodi referred the agitated Zuma scion to the Department of Mineral Resources, explaining it was not his place to intervene. After that Ramathlodi refused to take the younger Zuma's phone calls. The next day, the Mining Minister was fired, replaced by an unknown junior politician from the Free State, one Mosebenzi Joseph Zwane. The only time Zwane had previously surfaced was when various associations with the Guptas became public. It sounded too brazen, too fanciful to be taken seriously. I'm not so sure anymore. Over the past week, Finance Minister Nhlanhla Nene blocked a rather transparent plundering attempt engineered by SAA chairman Dudu Myeni. She wants to interpose a small finance house into a long-ago arranged deal between the airline and Airbus on the premise that this tiny firm would eliminate SAA's currency risk. The actual purpose, as former JSE chief executive and SAA board member Russell Loubser puts it, was to fleece fees from the multi-billion rand transaction. Nene publicly issued a statement to overrule the idiotic scheme. Last night Zuma fired him, replacing the respected technocrat with a low ranking ANC cadre even more of an unknown than his new Mining Minister

I'm not going to go into this story any more. The camel was buckling already and this might have been the last grain of sand that pushed it over. Zuma now had completely raped the country. Oh and he wasn't finished yet. Fuck – if you can fire the minister of finance because he has identified your girlfriend as the charlatan she is why stop there. Rumours then abounded that a number of other ministers were on their way out, Rob included. I would imagine that Zuma was "pumped' (his nether regions are really the only functioning part of his body) on that Thursday morning. He had shown South Africa who was boss and he was on a roll. There was going to be a big firepool party at either Nkandla or the Guptas' kaya in Saxonwold. I was clinging onto anything here and the potential firing of Rob was pretty good news to me. But then you had to look at Zuma's MO. Fire a minister and replace him with a dumbassed patsy. If Rob went then his replacement would have been there to listen to the black business council and jungle jim and them only.

What then – well David Des Douglas Sacrificial Lamb etc would have been lobbied to cancel the PPPFA (Preferential Procurement Policy Framework Act) and this would have been the panacea for black business to lap all government business. The new minister of trade and industry wouldn't argue and would publish even more ridiculous BEE charters to make compliance even more impossible. It is a sin to be white in this country you know, and they would fucking show us. If you want to see what our Des(olate) might have done take a look at Ray Hartley's black comedy article on his first day in office – Hartley stresses this is a work of fiction.

I'm not sure that Zuma has the same level of power to sack incompetent ministers (they are all incompetent barring Pravin and Hanekom) and replace them with even bigger idiots. I think he is on a bit of leash now. I wouldn't underestimate him though, he's still a dangerous idiot and can inflict a lot of damage in a very short period of time.

What then of this PPPFA and what'll happen if it is repealed?

The act exists to provide preference points or preference in general to a certain group of people. In the past it focused on levels of ownership. Now it works on BEE scores. I would imagine that Treasury is going to have a major problem with the new retarded BEE regime and preference points because it is going to end up in court. This is the way that businesses get an advantage over each other. If you take the act away what are you going to do? How are you going to favour a certain group over another without defining that group in some way. What our good racist jungle jim doesn't understand is that there is no other way without violating the constitution, not that jungle gives a fuck about that. I believe that it is a little too standard grade for his lower grade intelligence to grasp.

Zungurisation – shame I have been picking on poor old Sand Isle unnecessarily it appears

The Sunday Times wrote this week that Zungu was out of favour with number one. Bugger – from now on Zungurisation will be known as Guptafication.

Happy new year everyone. I'm very positive about next year. I think Zuma is going to take a pounding but he will be probably be here at the end of 2016 because he will do anything to stay of jail. I don't know if he fully understands the extent to which the average tax payer fucking hates him though and how they are now really baying for his sordid HIV free blood. Here's a song for him and his bloated and useless cabinet (excluding Pravin and Derek).

Related articles

Game of Thrones, Pravin Gordhan edition: When the target reclaims the hot-seat by default

The madness of King Zuma

2015 Photo of the Year: President Jacob Zuma

State of the nation - indeed. No foreign land owners and set asides

The speech that caused the trouble - FERIAL HAFFAJEE

 

This is the 1000th post or THE SUCCESS OF BLACK BUSINESS WILL BE MEASURED AGAINST THE FAILURE OF WHITE BUSINESS

This blog was started in August 2006. I started writing it as a guide to people who wanted to know more about the vagaries of black economic empowerment. Perhaps the liberating experience of having a platform to pretty much say what you want went to my head because the blog soon evolved into a political vudderfok venting place. Many would argue that it devolved into such a home. There were some particularly good posts - I have to say this myself because no one has told me as much - that contained my analyses of certain aspects of this sordid industry that I operate in. Other times there were knee jerk digs at the quality of personage that works in our rudderless regering. I came across some of the biggest racists that this country has ever seen (jungle jim) and in certain cases I endorsed one or two people who have slipped so far in my estimation that I cannot understand why I bothered with them in the first place (Thami Mazwai).

This post is a short(ish) reflection on the last 9 years. A hell of a lot has happened in those years. The first codes of good practice came out in February 2007 followed by a number of sector codes. All this good work was negated by Rob's Folly (revised BEE codes). We have seen the politically connected benefit (Penuel Maduna under Mbeki – and I don't care if I spelled his name incorrectly) and now Zungu under Zuma. To a certain extent Zungu got his arse kicked in the Arcelor-Mittal deal – but not hard enough unfortunately because it is his band of BBC merry men that are attempting to hijack the economy with the full endorsement of Number One and his handlers.

When I started in this business I believed that we could make a go of this empowerment thing. The Maslow-approved scorecard made so much sense that it could only but work. That was in spite of the fact that the codes and all of the supporting documentation wasn't particularly well written and that the DTI had absolutely no clue what they were doing. Even when you take this into account we saw an amazing take-up of BEE throughout the country. I measure this by some of my more remote clients who couldn't get a scorecard out of the local Worcestor butcher in 2007 and now you can get scorecards out of their local filling station. If the scorecard message is getting through to rural Worcestor then it must mean that a greater awareness has drifted through the economy.

This is what happened over the next five years

1. Scores steadily improved. I noticed that certain verticals stuck to an industry average, the banking sector is probably the most obvious.
2. The message circulated throughout the economy
3. Investments in enterprise development (more often than not donations) and skills development increased
4. High profile BEE deals petered out. Most of them had been concluded and needed to run their course, in many cases they were extended
5. The new breed of potential BEE takers started getting pissed off because the deals were done. They persuaded Rob that a change was needed

And so change arrived. Rob's revised codes were bludgeoned through, the DTI paid scant regard for any comments. And here we sit on the cusp of the new BEE era.

The NEW BEE ERA

I hate the term BEE, irritates me. The new ERA is simply a system where by a small cabal of connected Africans (someone described them to me as the Aurora crowd but I think you can throw in the Imperial Crown Trading crew too) designed a system whereby they would benefit under state procurement because white companies (a broad term describing everything that is not black by definition) could not compete on points or on racial profile. To quote Loane Sharp

The government is now creating 100 "black industrialists" (the government's term), and it appears that the much-vaunted R1-trillion infrastructure programme is being delayed to ensure that government-nominated industrialists win the overwhelming proportion of civil engineering tenders.

You see the problem here was that companies were making such great progress in their BEE endeavours that black owned companies could no longer compete on points. To make matters worse they would also need to go through the expense of empowerment even though they were black just to match a white owned competitor.

"Nee fok dit," they said sobbing into their single malts at the Michelangelo. "We'll reduce everything down to race and create a system that can only suit us." And so they did, the revised BEE codes are just one small element of this, the PPPFA is the next to fall.

Where do we find ourselves in this 1000^th post? A simple summary must be – THE SUCCESS OF BLACK BUSINESS WILL BE MEASURED AGAINST THE FAILURE OF WHITE BUSINESS, and ultimately the economy. Anthony Butler perhaps captured this sentiment perfectly when describing Malusi's ridiculous visa rules

It would be comforting to imagine that this is merely a "departmental silo" problem, in which Home Affairs is preoccupied with child trafficking, while Tourism is preoccupied with visitor convenience. Or that this is all a matter of face for a young minister who wants to be president, has failed as minister of public enterprises, and now cannot bow down before the forces of reaction. But it is much worse than that. (I)t is about race. The tourism industry, no matter how many jobs it creates, shows a white face to government, and the success of the sector breeds resentment.

Related articles

Has Treasury been captured by the black business lobby?

Draft PPPFA regulation disgust (discussed and cussed)

Draft PPPFA regulation disgust (discussed and cussed)

In his 2015 state of the nation giggle session our very competent, intelligent and decisive president made the following announcement.

Government will set-aside 30% of appropriate categories of State procurement for purchasing from SMMEs, co-operatives as well as township and rural enterprises.

We are quite used to this esteemed personage's platitudes and incredible decisiveness so it might be quite strange to the average person when he does actually deliver on his promises.  He has in fact in the new draft PPPFA regulations.  A Bardot delivery had these same regulations sent to me, it would be wrong not to post them up here for your perusal.

Here are a few of some of the features:

1. 80/20 works for R10m to R50m
2. 90/10 for more than R50m.  If you are seeing new QSE patterns emerging you would be on the money
3. 50/50 points' system for less than R10m

The 80/20 and 90/10 systems work on standard BEE points' allocations.  However the 50/50 system is a lot more interesting. This is what it looks like

Points will be allocated in accordance with the table below

No.	Criteria	Points
1	Price	50
2	Specific Goals:
2.1	Individuals who had no franchise in national elections before the 1983 and 1993 Constitutions	12
2.2	51% or more ownership by females	12
2.3	51% or more ownership by persons with a disability	12
2.4	SMME (Small, Medium and Micro-enterprise)	6
2.5	LED (Local Economic Development)	8

This harks back to the 2001 PPPFA regulations. No franchise before the two constitutions effectively includes all black people as defined. Africans had not vote before '83 and '93. Coloureds and Indians didn't have the vote before 1983. The reference to disabled and women includes ALL women and disabled people.

I do rather like the inclusion of SMME and Local Economic Development because the issue with the current regulations is that it didn't favour regional businesses. What Zille and Kane-Berman missed is this paragraph

(2) (a) For the specific goals under 2.2 to 2.5 in the table above, the Minister of Finance (Minister) may, from time to time, prescribe targets that must be procured from certain categories of person or commodity groups. Therefore, the number of points, as well as the groups referred to in the specific goals in sub-regulation (1)

What this says is that Nene may use set asides. Something that the Constitution would not be happy with (as if that has ever been a problem for our literate and competent legislators), and something that Treasury banned in 2006.

Now onto some of the more interesting features of 2.1 above (you will see on page 8 that this requirement may never be removed from any tender). You'll notice the word "INDIVIDUAL", this is a very specific word, it refers to individuals and not classes of people. As I mentioned African people did not have the vote until 1994. This means that only individuals who are over 21 years old and African can qualify. Indians and Coloureds get a rawer deal. They would need to be 31 years and older (as if they haven't been shafted enough under the revised codes). As this regulation gets on in the years so will the age of the black person increase.

This is pure BBC – a subtle attempt at favouring Africans over other black groups.

Another issue which plagues me is the value of the tender. What the 50/50 system does is give certain types of people up to a 100% price advantage. If they tick all the boxes under 2 above and get 1 more point for price they could 51 points which beats the bidder that only offered the best price (cost effectiveness is a vital ingredient of section 217). The rules are that they should win the bid. But this system is only for bids for less than R10m. If that bidder comes in a R10,000,000.01 then they are no longer part of the R10m scheme. In effect this system will only work for bids less than R5m.

The whole system is completely open for abuse. It is absolutely unconstitutional and unaffordable.   Related articles

Has Treasury been captured by the black business lobby?