Archive for March, 2010
The DTI Lashes out at Solidarity
Posted by Gavin in BBBEE Knowledge, General on March 25th, 2010
The Department of Trade and Industry has for the very first time defended its policies on B-BBEE by lashing out at Solidarity. This is of course very good news from an empowerment perspective because the DTI has now shown clear support for this policy and an intention to implement it correctly. A lot of credit can be given to the DTI for taking this very important step.
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The Department of Trade and Industry (the dti), has noted media reports
regarding the findings of trade union Solidarity research that Black
Economic Empowerment (BEE) has led to a remarkable increase in black
ownership on the Johannesburg Stock Exchange (JSE), as well as ownership
of insurance policies.
the dti is particularly concerned about these reports, as they do not
address the issue of direct ownership which is critical when measuring,
the level of transformation.
Department’s BEE Chief Director Ms Nomonde Mesatywa, says it appears
that the survey focuses on measuring indirect ownership through pension
funds, medical schemes and insurance polices, etc.
According to her, unlike the finding of Solidarity, government has
conceded a maximum of 40% in terms of measuring indirect ownership.
“In relation to the Solidarity findings of 23.8% it is still far
below the 40% mark in terms of the Mandated Investments Exclusion
Principle, where 15% of direct ownership (unencumbered) is still
required. The actual direct ownership in the JSE listed companies is
still encumbered; therefore it is premature to suggest that the
implementation of BEE has contributed more to the development and
promotion of a black middleclass than is recognized” she said.
Mesatywa added that BBBEE is about more than just ownership of the JSE
and that other elements need to be considered.
“We need to consider the other elements like employment equity,
skills development, Enterprise Development, Procurement etc as well. The
effective implementation of B-BBEE must be measured holistically by
utilizing the Balance Scorecard of Codes of Good Practice, thus a
research on one element can not presuppose that there has been
sufficient empowered and that the lives of black people across the
spectrum has significantly improved”
Last month at the inauguration of BBBEE Advisory, Deputy President
Kgalema Motlanthe, said that the pace of transformation has been
painfully slow. This statement has been amplified by the recent study
commissioned by Business Unity SA which revealed equality in the upper
echelons of corporate SA has not yet been achieved, as Blacks and women
continue to be under-represented in all directorships and top executive
leadership positions of the JSE-listed companies.
The department is in a process of doing a follow-up on the BBBEE
baseline study that was done for 2007/8 in measure the impact of BBBEE
three years post the gazetting of the Codes of Good Practice.
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The Department of Trade and Industry (the dti), has noted media reports regarding the findings of trade union Solidarity research that Black Economic Empowerment (BEE) has led to a remarkable increase in black ownership on the Johannesburg Stock Exchange (JSE), as well as ownership of insurance policies. the dti is particularly concerned about these reports, as they do not address the issue of direct ownership which is critical when measuring, the level of transformation. Department’s BEE Chief Director Ms Nomonde Mesatywa, says it appears that the survey focuses on measuring indirect ownership through pension funds, medical schemes and insurance polices, etc. According to her, unlike the finding of Solidarity, government has conceded a maximum of 40% in terms of measuring indirect ownership. “In relation to the Solidarity findings of 23.8% it is still far below the 40% mark in terms of the Mandated Investments Exclusion Principle, where 15% of direct ownership (unencumbered) is still required. The actual direct ownership in the JSE listed companies is still encumbered; therefore it is premature to suggest that the implementation of BEE has contributed more to the development and promotion of a black middleclass than is recognized” she said. Mesatywa added that BBBEE is about more than just ownership of the JSE and that other elements need to be considered. “We need to consider the other elements like employment equity, skills development, Enterprise Development, Procurement etc as well. The effective implementation of B-BBEE must be measured holistically by utilizing the Balance Scorecard of Codes of Good Practice, thus a research on one element can not presuppose that there has been sufficient empowered and that the lives of black people across the spectrum has significantly improved” Last month at the inauguration of BBBEE Advisory, Deputy President Kgalema Motlanthe, said that the pace of transformation has been painfully slow. This statement has been amplified by the recent study commissioned by Business Unity SA which revealed equality in the upper echelons of corporate SA has not yet been achieved, as Blacks and women continue to be under-represented in all directorships and top executive leadership positions of the JSE-listed companies. The department is in a process of doing a follow-up on the BBBEE baseline study that was done for 2007/8 in measure the impact of BBBEE three years post the gazetting of the Codes of Good Practice.
ABVA in Disarray
Posted by Keith in Accreditation, BBBEE Knowledge, Interpretations, Verification on March 2nd, 2010
The split we expected in ABVA is beginning to show. EMEX has resigned from ABVA because they say they “cannot be part of a voluntary association that follows interpretations which were not gazetted by the DTI.”
We know of other agencies that are as concerned about ABVA acting as judge and jury.
Even the dti is annoyed with ABVA. Nomonde Mesatywa, chief director of BEE says “We have been engaging with them and have told them that they cannot introduce new principles and cannot pronounce on policy issues,”.
I too was interviewed for the press article and also criticized ABVA for making rules. In my interview I brought up the successful challenge that we instituted against ABVA at the Competition Commission in 2007.
Subsequently ABVA has issued a press release once again denying the turmoil in its organization. They make the following point:
On the issue of acceptance of member’s certificates, ABVA never recommended that only its member’s certificates should be accepted in the market place, but has always referred to the legal interpretation of all the legislation which governs BEE implementation, the Codes of Good Practice, the SANAS R47 and the Verification Methodology. The legal position embodied in these documents show that only agencies that have made application to SANAS before the 1st February 2010 could be regarded as a “verification agency” for purposes of the minister’s notices issued during the course of 2009. This was ABVA’s position whether or not a particular verification agency was a member of it or not.
Before my complaint to the Competition Commission in 2007 I obtained a letter from ABVA which stated:
“ABVA requires that when their members are considering certificates for calculation of procurement points in a verification only certificates from Verification Agencies that have submitted to SANAS for accreditation will be considered valid. In order to validate if a Verification Agency has submitted to SANAS one would need to consult with the Full Member listing on the ABVA website or request from the Verification Agency directly their proof of submission letter from SANAS.”
They also state: “The article also makes mention of a complaint against ABVA to the Competition Commission yet fails to mention that this complaint was dismissed.” This is untrue. The complaint was not dismissed. It was not referred to the tribunal due to a commitment made by ABVA not to condone actions by its members that are contrary to the codes. ABVA are now not only ignoring their commitment, but denying that they ever gave that commitment to the Competition Commission.
A Julius Dilemma
Posted by Keith in BBBEE Knowledge, General on March 2nd, 2010
Most people I know agree that proper transformation is necessary in South Africa. We still have a long way to go to improve the situation for our population. The playing field are still not level!
Recently it was reported that Julius Malema is a partner in a company that won tenders worth R140 million in Limpopo. If indeed this report is correct, then most people will feel outraged by this report. Most will agree that this is not the type of transformation that we need or that anyone had in mind for the new South Africa. A new word has even been created in South Africa: “tenderpreneur”. The respected businessman Bobby Godsell has criticized tenderpreneurs where businesses add no value to a transaction.
Now there are two types of transformation or empowerment that are used in South Africa – the tenderepreneurs and the true broad-based. No other solutions have been proposed and interestingly enough all major political parties, including the official opposition have policies around transformation because they all recognise the need for transformation. There are only two choices: Tenderpreneur and broad based black economic empowerment. B-BBEE if implemented properly can achieve all that we want in South Africa. Tenderpreneurs will make a select few very wealthy and do nothing for the population at large.
I repeat – there are only two choices. If, like me, you agree that the tenderpreneur approach is wrong, then the only viable option is B-BBEE. The opposite of B-BBEE is making Julius wealthy! There is only one way to beat that option – by implementing B-BBEE so well that tenderpreneurs lose all their business.
Lets therefore try to implement broad-based black economic empowerment properly and grow the economy for everyone. Let’s build up our BEE scorecards, make a serious effort to help the less fortunate. We as South Africans ARE a caring nation – we just sometimes get carried away by our emotions and passion. Let’s direct that passion to where it can help. Let’s follow the B-BBEE codes, let’s support South Africa. Let’s get more positive.
Let’s make B-BBEE the only viable alternative to B-BBEE.
ABVA, EconoBEE – Response
Posted by Gavin in Accreditation, General, True Empowerment, Verification on March 1st, 2010
Published 1st March
Response to Business Report Article ABVA has sent an immediate response to the Editor of Business Report in regards to the inaccurate article running in Business Report Monday March 1st.
To the Editor:
ABVA would like the right of reply to the article in Business Report of Monday March 1st, BEE Verification Industry in Turmoil.” The article contains many factual errors and unsubstantiated claims and has a sensationalist tone not often found in the Business Report.
While ABVA Chairperson Andile Tlhoaele was quoted in the article, many other inaccurate claims were made in the article that ABVA did not have the opportunity to respond to.
The so-called BEE verification leaders quoted seem to only include a representative from Emex who makes wildly inaccurate claims about ABVA and a BEE consultant who has opposed the accreditation process from the beginning. It is also important to note that the agency that has resigned its membership from ABVA is one that, at the time of resignation as ABVA member, was in the process of a disciplinary procedure due to complaints from other ABVA members against them, for illegally copying the content of other agencies’ certificates and then distributing it in the market as their own.
The generalizations made about the verification industry based on these two very personal views are therefore shaky at best and should not have been the basis for such an inflammatory article.
In regards to the main and inaccurate claim that ABVA is manipulating the industry or interpreting codes, ABVA has had many meetings with the dti in this regard. As stated by the Dti and agreed by ABVA, ABVA does not set policy and never has or ever intends to pronounce on policy.
ABVA however, does have a role to ensure that a consistent application of the codes is practiced in the market place. This is why draft practice notes, pertaining to the legal interpretation of the Codes and related legislation, were issued for comment to members. These draft practice notes have nothing to do with policy, but are an attempt at bringing a level of consistency to the application and legal interpretation of BEE.
Government would not put themselves at legal risk by interpreting legislation. In January 2009, Dti withdrew the “Interpretive Guide” (published in 2007). This is the same document which your article also refers to. If anything, this action on the part of the Dti at the very least supports our contention that they do not see their role as the legal interpreters of the legislation.
It is important to note that ABVA has not issued a single practice note to thus far and that the document circulated to members contained draft practice notes for their comment. The draft practice notes currently represent the compilation of external and internal legal opinion on certain key interpretational matters. Policy issues are not addressed in the document. The circulation of these draft practice notes follows a mandate given to the ABVA board from ABVA members at the last AGM of ABVA in May 2009 and is not a unilateral action by the chairperson of ABVA.
It also required no amendment to ABVA’s constitution as is alleged by EMEX. ABVA’s technical committee has received several comments (even from non-members) following the circulation of the draft practice notes. All of these comments are currently being evaluated before circulation of any final practice notes. It is important to note that EMEX did not make use of the opportunity to comment on the draft practice notes or to express their dismay with the process while they were a member. Their actions rather seem to reflect those of a disgruntled ex-member for the disciplinary procedures instituted against it.
One can question why one particular BEE Verification Agency does not wish to apply a consistent approach to the implementation of the Codes, especially when any final practice note will be the result of legal opinion and an inclusive and consultative approach with members and non-members. ABVA strongly condemns actions that enable every Verification Agency to do as they please in the market place, leading to varying interpretations that allow for the giving away of points on the scorecard and diminishing the intentions of BEE. The vast majority of members responded very positively to the circulation of the draft practice notes.
The only amendment to the constitution of ABVA occurred at the May 2009 AGM of ABVA and related to the widening of ABVA’s membership base to include the corporate sector and BEE consultants. The very purpose of this move by ABVA was to obtain a more representative input into legal / interpretational matters. This change to the constitution had nothing to do with creating policy as claimed in the article and everything with being transparent and responsible following the mandate given to us by our members to issue practice notes to ensure consistency and standardization with interpretation.
On the issue of acceptance of member’s certificates, ABVA never recommended that only its member’s certificates should be accepted in the market place, but has always referred to the legal interpretation of all the legislation which governs BEE implementation, the Codes of Good Practice, the SANAS R47 and the Verification Methodology. The legal position embodied in these documents show that only agencies that have made application to SANAS before the 1st February 2010 could be regarded as a “verification agency” for purposes of the minister’s notices issued during the course of 2009. This was ABVA’s position whether or not a particular verification agency was a member of it or not.
The article also makes mention of a complaint against ABVA to the Competition Commission yet fails to mention that this complaint was dismissed. BEE consultants such as Levenstein have been opposed to the accreditation of BEE verification agencies from the outset, however this accreditation process is the ONLY way to ensure a credible and consistent industry.
The article’s claim that the verification industry is in turmoil could not be further from the truth. Thanks to the assistance of organisations such as ABVA, there are now accredited agencies and a host of agencies who will soon be accredited that can take BEE verification to the next level.
ABVA is proud of its achievements working with government and business so as to ensure credible and consistent application of the BEE codes.
Kind Regards,
Andile Tlhoaele
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Email sent 1st March in reply.
Dear Andile,
I would sincerely suggest you check your facts BEFORE you issue them to the press.
I’m attaching(http://www.econobee.co.za/downloads/general-bee-documents/competition-commission-ruling/download.html), for the umpteenth time to ABVA, the response from the Competition Commission – which Business Report also has in its possession. The relevant exact wording is as follows:
“The Competition Commission will not refer this complaint to the Competition Tribunal”.
It goes further to give it reasons for the non-referral – please read page 2 and page 3 carefully including:
“ABVA has undertaken to raise awareness among its members regarding the concerns raised in the complaint to ensure that if the practice exists among its member it is not condoned.”
This was an undertaking that ABVA gave to the Competition commission ON CONDITION that they would not refer the matter to the Tribunal. We both know that ABVA never followed up on that undertaking, but I was satisfied with the decision taken by the Competition Commission, on the basis that they had obtained a legal undertaking from ABVA and they clearly defined what certificate is acceptable or not. (see point 1 at the bottom of page 2).
It is therefore absolutely untrue to say that the “complaint was dismissed”. It was thoroughly investigated and not referred because the Competition Commission was given an undertaking by ABVA.
ABVA has in the past recommended that certificates only be accepted if produced by a member of ABVA that has applied to SANAS for accreditation. This is patently incorrect, which is why the dti are pretty irritated with ABVA for continuing to make the rules.
At no stage have I personally attacked any person, so do take offense to your untrue assertion that “I have been opposed to the accreditation process from the outset”. I have been opposed to any person or organization choosing not to follow the B-BBEE Codes of Good Practice. I have always and continue to support the process as defined by the government, the dti, and the minister. I was the first person to inform my clients and readers of my newsletter that they would eventually have to use an accredited agency because the minister decided so.
Your untrue and potentially defamatory statement and and my response will appear in my newsletter tomorrow unless you retract them before my newsletter is published. I have more than 100 000 readers.
There are other issues with your response on which I don’t have time to comment, but I do think you will incur the further wrath of the dti by stating “that they do not see their role as the legal interpreters of the legislation.” I would actually rather not see ABVA, me, the dti and SANAS fighting each other as it does not further the good cause of transformation.
–
Regards
Keith Levenstein
CEO
Econoserv SA cc/EconoBEE
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Email received 2nd March
Hi Kevin (sic),
The condition was never communicated to ABVA.
Many thanks,
Andile Tlhoaéle
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Email sent 2nd March
Dear Andile,
Theo Lombard was the chairman of ABVA at the time. He was contacted by the Competition Commission over my comment. The board must have given that commitment. Someone at ABVA must have received the final determination from the Competition Commission. In any event ignorance of the law is no excuse, and the Competition Commission’s decisions are legally binding.
Bear in mind that:
* The decision was communicated to the PR company that ABVA hired when they issued a press article on the subject in 2007.
* It must have been available to the board when they determined that “the complaint was dismissed”. How could the board react to the ruling if they never received it?
* It has been on our website since the day we received it.
* I sent it to Wade van Rooyen recently.
* How did you personally reach that conclusion yesterday without reading the document?
* I therefore repeat – your public statement yesterday rebuking the Business Report for inaccurate reporting is in itself incorrect.
Furthermore ABVA has an obligation even today to uphold its commitment given to the Competition Commission in 2007.
Business Report has been unfairly attacked by you. They did not make factual and unsubstantiated claims as per the above. I suggest an apology to them is in order.
Regards
Keith Levenstein
CEO
Econoserv SA cc/EconoBEE
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