BEE codes must trump charters – BMF

The Black Management Forum (BMF) has proposed that the Broad-based Black Economic Empowerment (BEE) Act must supersede all other laws and policy tools that seek to achieve economic transformation in order to prevent the “tick box” and minimalist approach adopted by the private sector to avoid compliance. The vocal pressure group said yesterday that it noted with disappointment that mining, a critical sector of the economy that employed 500 000 people and generated more than 30 percent of exports, was the only industry in South Africa that had made no attempt to align itself with the legislation.

The Department of Trade and Industry, as the champion of economic transformation, had not publicly taken steps to address this, the BMF said. This and other proposals are part of the submission made by the BMF on Monday to the department as part of the public comments on its revised codes of good practice on broad-based BEE. The closing date for submissions is today. The BMF said the mining charter should align itself with the amended codes, as in its current form it betrayed every principle of empowerment contained in the codes. “Mining is the only sector of the economy where there is no requirement for independent verification of broad-based BEE contributions. None of the mining companies has a BEE certificate. It is the only sector that has made no attempt to align with the BEE act,” it said.

The Chamber of Mines could not be reached for comment yesterday. The BMF added that it was disappointed that the government continued to approve sectoral codes or charters. There are seven sector codes for information and communications technology (ICT), transport, property, construction, forestry, tourism, and chartered accountancy. In November, Trade and Industry Minister Rob Davies released phase two of the financial sector charter (FSC) for public comment. “If the FSC becomes a sector code, the majority of JSE-listed companies by value will not be measured against the generic BEE scorecard. We believe that all sector codes should be abolished,” it said.

“The sector codes have arbitrary deviations from the BEE codes, which have no rationale. For example, in the ICT sector, a company becomes compliant if it has concluded a transaction worth R7.5 billion. “The sector codes exclude large sectors of the economy from implementing the [BEE] codes. They introduce added complexity and make it impossible to have cross-sector comparisons of broad-based BEE performance,” the BMF added. The organisation was instrumental in pushing through the codes that are now being revised. These have seven pillars of empowerment in which companies can score and be given credit.

The BMF said: “There were loopholes within the codes that allowed companies to game the system. Companies adopted a ‘pick-and-choose’ approach to implementing broad-based BEE. They could ignore poor performance in one area and still have an overall high level of compliance. This was partly due to low targets in areas such as skills development, preferential procurement, enterprise development and socio-economic development, where companies could get ‘free points’.” The revised codes have whittled down the seven pillars to three. These are ownership, skills development, and enterprise and supplier development.