Archive for category Verification
The New Targets Conundrum
Posted by Keith in Accreditation, Interpretations, Scorecard points, True Empowerment, Verification on January 13th, 2012
The BEE Codes of Good Practice sets variable targets for employment equity and procurement. For all other elements, there is a fixed target e.g 3% of NPAT for enterprise development.
Employment equity and procurement have target that state “Years 0 to 5″ and “6 to 10″. The 6 to 10 target are higher than the 0 to 5. eg. senior management targets for 0 to 5 are 43% and 6 to 10 are 60%.
Since the codes came out there have been debate about when the new targets kick in. It was presumed that codes have a duration of 10 years as per paragraph 13.2 of code 000 and the new targets apply half-way through. The wording has been ambiguous enough for people to came up with various interpretations.
1) New targets apply for all verifications as from 9th February 2012
2) New targets apply for all verification as from 9th February 2013
3) New targets apply after the 5th verification that a company undergoes.
4) New targets apply for companies whose rating period ends after 9th February 2012.
In May 2011 we wrote to the dti asking for clarity and pointing out that if the minister were to issue a new interpretation, it may have be issued in terms of 9(5) of the act giving the public 60 days to comment before the final gazette would be issued well before 9th February 2012. This is no longer possible.
The new targets will have a very serious effecton your scorecard – there can be up to 15 points difference if you use the old targets.
Latest news from the dti is they are looking at option (4) above as their understanding on the codes. This means if your rating period ends after 9th February 2012, then you will use the the new targets. A rating period generally refers to your financial period, or financial year. So, a company that has a financial year that ends in December 2011 will be rated on the old targets, even if the actual verification takes place in October 2012. A company whose financial year ends on 28th February 2012, and uses that as their rating period will be verified on the new targets, even if that verification takes place in June 2012.
Measurement period:
Key principle 2.3 of the codes state:
The basis for measuring B-BBEE initiatives under the Codes is the B-BBEE compliance of the measured entities at the time of measurement.
There has been much debate over the concept of the time of measurement period or rating period. Is it the date on which you are being verified, or the period during which your scorecard is being calculated? Financials form a large part of the BEE scorecard so companies generally use their annual financials as the basis for measurement. It does happen that due to delays a company will submit its 2010 financials for verification in 2012 because its 2011 financials are delayed. In this case the old targets would be used. A more diligent company that produces its financials on time will have to use the new/higher targets.
Another issue is many verification agencies do not respect the rating period for their EE, management and ownership calculations. Your measurement period may be 2010 to 2011, but the agency will insist on measuring you on EE, management and ownership as at the date of verification. Under these circumstances we wonder which target the verification agency will use?
The solution is for the minister to issue a gazette or regulation outlining exactly how the new targets will work. It would have to encompass better interpretations around the measurement period.
PPPFA and Treasury tries to clear waters.
Posted by Keith in Accreditation, BBBEE Knowledge, Verification on December 6th, 2011
The Treasury Dept has issued guidelines to be implemented for the new PPPFA regulations coming into effect tomorrow (7th December).
They have fixed up the errors we identified, and which we had requested them to change – i.e. EMEs that fall into the Tourism or Construction sectors have different EME thresholds. In the original regulations it did not specify that certain sector have different thresholds – it made the blanket statement that EME’s have a turnover of less than R5 million, but did state that the regulations are in line with the B-BBEE Codes.
They have now clarified that an EME is one with an annual turnover of less than R5 million, unless you fall into the tourism sector where the threshold is R2.5 million and the Built Environment Professionals sector where the EME threshold is less than R1.5 million
The second issue relates to acceptable certificates:
The guidelines relating to verification agencies state that certificates will be identifiable by a SANAS logo and a unique BVA number. All certificates bear this logo, other than EMEs, because SANAS has not accredited any agencies to issue certificates for EMEs. No EME certificate issued by a verification agency is allowed to carry the SANAS logo.
The guidelines also do mention with respect to EMEs that “Sufficient evidence to confirm a qualifying EME is a certificate issued by an Accounting Officer (as contemplated in the CCA), a similar certificate issued by a Registered Auditor or a Verification Agency.”
We have spoken to Treasury and they confirm that the intention is for an EME certificate, like all certificates to carry the SANAS logo. While there could well be a legal challenge to the slight ambiguity in the guidelines, there is no doubt that every procurement officer affected by the PPPFA is going to look for a SANAS logo, and if one is not present on the certificate, they will automatically reject it.
EMEs may have to produce two EME certificates
Posted by Keith in Accreditation, BBBEE Knowledge, Interpretations, Verification on November 17th, 2011
A key principle of government’s economic growth policy is to encourage the development and growth of small businesses and entrepreneurs. One of the initiatives is to reduce red tape for those small businesses. Recently the National Treasury issued new procurement regulations that were intended to reconcile B-BBEE with government procurement via the PPPFA (Preferential Procurement Policy Framework Act).
These regulations stated that the PPPFA would use B-BBEE principles in evaluating all government tenders. It also meant that a small business could obtain one B-BBEE certificate and use it for both their private enterprise customers, as well as for submission with government tenders. Small businesses, with an annual turnover of less than the threshold are defined as Exempt Micro Enterprises (EMEs) and are exempt from all forms of B-BBEE. This means they do not need to go to the effort and expense of building up a B-BBEE scorecard.
If they are in the tourism industry this threshold is R2.5 million. If they are Built Environment Professionals the turnover threshold is R1.5 million. For all other industries the current threshold is R5 million. This is set by the minister of trade and industry and can be changed by notice in the government gazette.
They do need to prove to both their private enterprise customers and government that their annual turnover is below their threshold. The B-BBEE codes state that:
“4.5 Sufficient evidence of qualification as an Exempted Micro-Enterprise is an auditor’s certificate or similar certificate issued by an accounting officer or verification agency”.
Typically an auditor will check the financials of the company and if its turnover is less than the threshold will write a letter to this effect. Most verification agencies will do the same task. These “EME certificates” are then given to the company’s customers, and to government as required by the new regulations. To date there have been some queries about the issuing of these certificates. We ourselves have queried a number of certificates, mainly on the basis that the company was lying about its turnover, or that the auditor or verification agency did not apply the correct industry thresholds. In some cases private enterprises rejected auditors’ or accounting officers’ certificates and demanded that the certificate be produced by a verification agency. It took some harsh words from us to those companies to get them to recognise that an EME certificate issued by an auditor or accounting officer was acceptable. This was based, not only on the codes but correspondence with the dti who confirmed that both auditors, accounting officers and verification agencies could indeed issue EME certificates.
As always there are complications: In 2009 the minister created the concept of “accredited” verification agencies and “non-accredited” verification agencies. In December 2009 and January 2010 we wrote to the dti and SANAS asking them for the definition of a non-accredited verification agency and received an unsatisfactory answer. In 2009 SANAS began accrediting verification agencies. On the letter of accreditation it clearly identified the type of work, i.e for which code the agency was accredited. We picked up that SANAS had not stated formal accreditation for codes 000, 800 and some of the sector codes. At our insistence SANAS re-issued their accreditation certificates formally allowing verification agencies to accredit for example QSEs (codes 800). They never issued formal notification to accredited verification agencies in terms of code 000. Code 000 is the statement that sets out key principles, defines EMEs and even defines specialised entities.
This is why all EME certificates issued by accredited verification agencies do not bear the SANAS logo because officially they do not have rights to produce EME certificates, and they do not have to follow the verification guidelines, which would include site visits and automatically increase costs. However certificates issued by accredited verification agencies tended to become acceptable, even to the extent that some companies even insisted upon it. The dti and SANAS never had a problem with verification agencies issuing EME certificates as it was in line with paragraph 4.5 of the codes above, and they still do not. As recently as 23rd September, in the notice issued by the dti minister regarding accreditation to IRBA, he re-iterated that paragraph 4.5 still remains valid for EMEs.
The new PPPFA regulations issued on 8th June 2011, and coming into effect on 7th December 2011 are intended to ensure that government procurement follows B-BBEE principles. Basically they state that adjudication of tenders submitted will take into account your own B-BBEE certificate issued in terms of the B-BBEE codes. The higher your BEE level, the more likely you are to win the tender. In the case of EMEs, they automatically qualify as level 4 ( a good level) or even level 3 (a better level) if they are more than 50% black owned. For small tenders, with a value of less than R1 million, a level 3 certificate can contribute approximately 16% of the entire tender adjudication, so it becomes essential for EMEs especially to obtain a valid EME certificate.
The new PPPFA regulations issued by the finance minister chose to use different wording to paragraph 4.5. Their paragraph 10 states:
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Broad-Based Black Economic Empowerment Status Level Certificates
10. (1) Tenderers with annual total revenue of R5 million or less qualify as Exempted Micro Enterprises (EMEs) in terms of the Broad-Based Black Economic Empowerment Act, and must submit a certificate issued by a registered auditor, accounting officer (as contemplated in section 60(4) of the Close Corporation Act, 1984 (Act No. 69 of 1984)) or an accredited verification agency.
(2) Tenderers other than Exempted Micro-Enterprises (EMEs) must submit their original and valid B-BBEE status level verification certificate or a certified copy thereof, substantiating their B-BBEE rating.
(3) The submission of such certificates must comply with the requirements of instructions and guidelines issued by the National Treasury and be in accordance with notices published by the Department of Trade and Industry in the Government Gazette.
(4) The B-BBEE status level attained by the tenderer must be used to determine the number of points contemplated in regulations 5 (2) and 6 (2).
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We have already highlighted the mistake made by the finance minister in that he defines an EME as being one with an annual turnover of R5 million when that is not currently the case in all circumstances. Their paragraph 10.1 also uses the wording “accredited verification agency”. Effectively 10.1 is incorrect and probably unconstitutional. We had hoped that reading paragraph 10.3 would sort out the problem as it uses the words: “…be in accordance with notices published by the Department of Trade and Industry”. When we wrote to the Treasury Department they told us any interpretations regarding the BEE codes, i.e the entire section 10, should be referred to the dti as they are the gatekeeper.
However, on Tuesday,15th November, SANAS put out the following notice to all verification agencies:
==================================================================
Dear All
Please familiarize yourself with the newly gazetted PPPFA Guidelines, according to these guidelines EME certificates cannot be issued by Verification Agencies, a letter confirming turn over below R5 million per annum must be written by either an Accounting Officer or an Auditor. There is even an attached format of how this letter should be written. Make sure that you do not mislead the public by issuing these certificates as though they will be acceptable in public service because all these complaints will come back and flood my system.
====================================================================
The guidelines of course refer to the entire Regulations, especially section 10. The email above states that EME certificates issued by verification agencies to private companies remains valid. However if the same EME wishes to submit documentation to “public service”, they will need to get another certificate, this time issued by an auditor or accounting officer. The many EMEs that currently have valid EME certficates produced by verification agencies are going to have to pay twice to get a second EME certificate. As noted above some private companies are INSISTING on certificate issued by verification agencies, while govt is now insisting on certificates to NOT be issued by verification agencies. The dti is happy with one set of certificates, while PPPFA is unhappy with it. The only way to win is to spend time and money, and red tape producing the same certificate twice. Apparently PPPFA is now interpreting the codes and insisting both SANAS and accredited verification agencies are following their rules. Even more confusing in our discussions with senior directors at Treasury, their had no idea of the policy as explained in the email above.
The problem could have been avoided if SANAS had issued full accreditation for code 000 to all agencies. It could also be avoided if the dti minister were to issue a ruling that overrides the Treasury’s requirements, or whoever is objecting to verification agencies issuing EME certificates.
At the same time we are well aware that some agencies, and accountants do not perform rigid checks on turnover and simply issue certificates on the basis of a faxed document purporting to be accurate financials. In many cases the company has a turnover of well above the threshold and is deliberately supplying ncorrect information, which is fronting and which the new regulations are trying to stop.
This issues raises more questions than answers.
1) What if a company accepted agency EME certificates in its own verification, and earned procurement points on those certificates. Surely this company’s certificate could not be used by the PPPFA because they used different rules in calculating their certificate?
2) Code 000 also states that all public entities, govt departments, State owned enterprises must obtain their own B-BBEE certificate. The new regulations emphasise this in their conditions by stating that if one agency procures from another the same 90/10 or 80/20 rule comes into affect and each government agency must supply a valid B-BEE certificate. Each government agency must use the specialised scorecard – because they do not have ownership. If the whole reason for excluding verification agencies from verifying EMEs is because they do not have accreditation for code 000, then they also do not have accreditation to verify specialised enterprises either! Therefore, at this point there are no agencies nor auditors able to issue valid certificates for any government enterprise or organ of state.
ArcelorMittal finally gets a B-BBEE Certificate
Posted by Keith in Accreditation, True Empowerment, Verification on August 17th, 2011
ArcelorMittal was in the news last year for all the wrong reasons. It tried to undertake a deal -called it a “BEE deal”, that would not have earned many points. There are have been calls for ArcelorMittal to produce its B-BBEE certificate for a long time, and the lack of a certificate has hurt many of its customers’ own B-BBEE scores. As a primary provider of steel, its B-BBEE credentials will flow down to most of the rest of the economy.
ArcelorMittal has now had its certificate verified – it is level 7 as follows.
Ownership 0
Management control 9.42
Employment equity 0
Sills development 11.09
Preferential procurement 15.51
Enterprise development 0
Socio-economic development 5
Total 41.02
Dear Minister
Posted by Keith in BBBEE Knowledge, Charters, Fronting, Sarcasm, True Empowerment, Verification, politics on March 9th, 2011
Dear Minister,
Please advise urgently.
My client is a QSE BEP. If he follows the BEP scorecard his ED target is R22 500 because ED is based on leviable amount. His SED target is R11250.
If he follows the codes of good practice his ED target is R2800 because we will use indicative profit and R1400 for SED.
If he follows the BEP scorecard he will need to pay R33 750 for both ED and SED, but if he follows the codes his cost is R4200 – a differential of R29 550.
Since the dti and SANAS are still seeking clarity, apparently now from the DG, and you have not any statement either, I need to know if the dti will condone my client following the codes that most suit him. The precedents have of course been set and we all know that SANAS will not regard this as a non-conformance and dti will not withdraw the certificate…….
On the other hand I’ve got some clients who are NOT in the construction sector but tend to like the lower adjustment for gender so are going to follow the construction/BEP codes. Is this also okay?
I know of a company that signed the final gazetted forestry charter but wants to follow AgriBEE and will use generic until that happens. Is this ok?
Now that I think of it, another client who has a turnover of over R1billion would like to follow the QSE scorecard for tourism. Also, a difficult client (you know how clients are) likes the Construction generic ownership element, the freight transport management control (for QSEs), the codes for EE, the QSE codes for Skills, and forestry for the other elements. Can I please have special permission to change the codes to suit my difficult client? He also wants to use a verification agency that had a pre-assessment letter in Feb 2010 but has now expired.
Another client would like to use ArcelorMittal as their verification agency. According to SANAS, ArcelorMittal has been accredited (for legal metrology, specifically weighing instruments), and the client feels that since ArcelorMittal, like SANAS, has no BEE certificate, they are a good organisation to do their BEE verification. Is this possible?
Minister, in any event we know that the dti/BEE Council will never be able to identify and really does not care about fronting, but being law abiding I’d like your approval to recommend fronting to my clients, who are being hamstrung by my honesty.
Yours sincerely
Keith
Call for SANAS to be suspended
Posted by Keith in Accreditation, BBBEE Knowledge, True Empowerment, Verification on February 24th, 2011
Code 000, statement 000 paragraph states that various entities are measurable under these codes. The list includes SANAS.
SANAS is the South African National Accreditation System, a public enterprise whose job is to accredit various organisations. Their job of accreditation includes that of BEE verification agencies.
The term “measurable under the codes” implies that those organisations require a valid BEE certificate.
SANAS does not have a valid BEE certificate. This is especially ironic since SANAS is the body whose job is to accredit BEE verification agencies. I wonder how SANAS is allowed to operate as an accreditation body when it does not adhere to the law of the land? Surely SANAS is not competent to do its job when it flouts the law?
The minister’s recent proposals for statement 005 require all accreditation bodies, including SANAS to be at least a level 3 contributor. Whether or not the proposals are gazetted, I cannot see how the minister can allow SANAS to operate while not in possession of a valid BEE certificate. I informed SANAS of this requirement more than a year ago, and today on calling them they still do not have a valid BEE certificate. It is four years since the codes were gazetted, and SANAS have still not bothered to become compliant.
We can only speculate why they have chosen to neglect their legal duties. Perhaps they don’t know, or maybe they don’t care about obeying the law. Maybe they know that their score is very low and are embarrassed. Either way SANAS is in breach of the law – the very law they they supposedly follow in order to accredit BEE verification agencies. I cannot imagine how can an organisation can insist on others following the law while they are in breach of it. How can they effectively accredit BEE agencies when they themselves do not follow the law?
I call upon the minister to immediately suspend SANAS as an accreditation body, and appoint other organisations that do choose to follow the law as a BEE accreditation body. I call upon the minister to remove the board and the CEO from their positions and institute an inquiry why SANAS has failed in its duty towards the country.
The law has been broken, and charges should be laid against both the board and the CEO.
Parliament has been very vocal about stopping fronting. They have so far been very quiet about SANAS and its willful neglect and denial of the law. SANAS have not fulfilled its mandate. It is time for SANAS to face the music!
Call for changes to BEE certificates
Posted by Keith in Accreditation, BBBEE Knowledge, True Empowerment, Verification on January 6th, 2011
Currently all BEE certificates contain an item called “Date of issue”. This represents the data on which the verification agency issued the certificate. All certificates are valid for a period of one year from date of issue.
The codes talk of a “Measurement period”. This represents the period under measurement. This would be the financial year on which the verification is based. Typically this is used to provide turnover figures. It is also used for procurement, skills development spend, ED and SED spend and net profit after tax.
Verification can take place many months, or even years after the end of the financial year. Most verifications make use of audited financial statements, and producing audited financials can take anywhere between 3 month and more than a year.
Verification can take many months from the initial appointment of the agency, to gathering the information, verification, queries and appeals until the final certificate is issued.
It sounds wrong that a certificate that is based on financials for the year ended 2009 can be issued today (6th January 2011), and it remains valid for the rest of 2011.
On the other hand a certificate issued in March 2010 based on the same financial period is valid from March 2010 until 2010.
Some verification agencies, wrongly, use current information for some of the other indicators including ownership, management and employment equity. One of the key principles of the codes (2.2) is “The basis for measuring B-BBEE initiatives under the codes is the B-BBEE compliance of the measured entity at the time of measurement”. In the case of financials it is the period used for the financial statements. It would not make sense to use disparate measurement periods, like 2009 for financials, but 2010 for ownership.
We would propose that the measurement period and validity date of the certificate be aligned. A new certificate based on two year old data is not an accurate representation of the BEE status of the measured entity, certainly not as it stands today, yet that certificate is regarded as valid because it was issued today and is valid for another year.
One option we have considered is that the certificate validity period be one year after the end of the measurement period: If your year-end is December 2010, then your certificate issued based on that period is valid for a year until 31st December 2011, no matter when the certificate was actually issued. If a measured entity delays getting its financial statements until October 2011, then its certificate will only be valid for 2 months.
This sounds a bit harsh, and it is impossible to obtain audited financial statements on the last day of the financial year. The JSE and SARS gives deadlines as to when financial statements should be issued, and we suggest this be incorporated into certificate validity dates, for example give a leeway of six months. so, if the financial year end is December 2010, then the measured entity would have a gap until June 2011 to get its financial statements and obtan a verified certificate. That certificate would be valid until June 2012. If the entity was only verified in December 2011, then its certificate is also only valid until Jun 2012, and not December 2012.
This will encourage entities to be verified as soon as possible after year-end, and to use current information. It will also ensure that the certificate is a more accurate representation of its BEE status.
It should be noted that audited financial statements are not a pre-requisite for verification. Signed management accounts are also acceptable – though the verification agency will have to perform extra checks to confirm some data. Therefore undue delays in preparing financial statements is not a good excuse for not obtaining an accurate and up to date verification certificate.
Suspect scorecards – is Serra Fronting?
Posted by Keith in Fronting, Verification on October 31st, 2010
Serra® Services is a company that provides washroom products and services. According to their web site,
“the company was established in 1985 and grown to create a competitive position in the washroom industry. According to independent market surveys, Serra® branded products are the preferred choice in seven (7) out of ten (10) “A” Grade buildings.”
I cannot find a definition of an A grade building but it appears to be similar to premium, top class office blocks etc. For example in March 2010, Redefine (a leadng property company issued a press release that it had acquired R520 million worth of A grade buildings), and there are hundreds of such properties.
Serra ® Manufacturing is part of the Serra®Group. It manufactures the washroom equipment that Serra® Services sells to these “A” grade buildings, and probably to lower grade buildings as well. They are the preferred choice in 70% of A grade buildings.
I know they offer services that include replenishing washroom supplies like soap dispensers etc and have monthly income from some of these customers.
Yet both Serra® Services and Serra ® Manufacturing state they are EMEs – i.e each entity, Serra ® Manufacturing and Serra ® Services has an annual turnover of less than R5 million – less than R416 000 per month!
Is this suspect?
1) Note how both scorecards use the same company registration number, even though they have different company registration numbers.
2) Both certificates are produced by SEIFSA, a non-accredited agency. The certificate produced in July 2010 is signed by the “analyst”, Charl Cilliers, but there is no signature of an officer from Serra ® or their accountant. The codes are clear: Only an accredited agency or the companies auditor of financial officer may sign EME certificates after 1st February 2010. The certificate is therefore invalid.
3) I do not believe that this company, that boasts of having its products in 70% of all A grade buildings is an EME in the first place. Note how they have even trademarked their company name. A R5 million per annum company does not do this.
This looks very much fronting, and joint blame must lie with Serra ® and SEIFSA which did not check with their accountant, or even use any initiative to decide if the company can indeed have a turnover of less than R5 million per annum. SEIFSA deserves criticism for continuing to sign verification certificates when it has no mandate to do so.
We have written to Serra ®, querying their turnover. There has been no response.
Fronting
Posted by Keith in Fronting, Verification on August 20th, 2010
There are two types of fronting taking place.
Fronting Activity 1:
The first, and most important, and most harmful is where a company allocates, or pretends to allocate shares to a black person, and puts him on the board, with the express intention of misrepresenting their business.
This is wrong, but happens in reaction to requests from predominantly government and public enterprises for details of the black ownership of the entity.
It is becoming commonly accepted that to do business with government or a public enterprise, you need to have anywhere between 25% and 60% black ownership.
There is no consistency: Various public enterprises and government departments have different requirements. Even within the same department, tenders have different requirements.
All public tenders are governed by the PPPFA (preferential procurement policy framework act) which lay down procedures and process from evaluating tenders. It even states that all tenders must take into account the empowerment credentials of each tenderer. It does not give any specific details on how those empowerment credentials will be evaluated, which is why each tender document looks different.
There is no clear interpretation of black ownership. As a result many unethical companies are creating front companies that are 51% black owned – where in some cases the black ownership has no idea he is even a shareholder, or has signed a proxy giving the other owners full rights to run the business as they please. There are cases where the new owner is only a temporary owner, and HAS to sell the shares back to the company some time in the future. While the ArcelorMittal deal is not necessarily fronting, this is exactly what their share deal is doing.
Fronting Activity 2:
The second type of fronting relates to the B-BBEE scorecard/certificate. A scorecard is usually only asked for by private enterprise, and measures the entities B-BBEE status against a wide rage of indicators – that is why it is called “broad-based”. Some companies will misrepresent their B-BBEE status to obtain a higher score than they would otherwise achieve. One recent example is of Shield Chemicals who forged their B-BBEE certificate – a fraudulent activity.
Because a certificate is based on up to 30 indicators, it becomes more difficult for a company to front, and it becomes easier for an analyst to identify that fronting. If a company used the dubious ownership methods mentioned previously, a consultant or rating/verification agency would quite easily pick it up and award zero points to the company as we estimated with the ArcelorMittal deal. The indicators are cleverly interlinked – if a company earns zero points on ownership and employment equity, it would be unusual, though not impossible if it earned full marks on management control and skills development, and these specific indicators would be checked by the rating agency.
Conclusion:
A verified scorecard becomes a public document that is scrutinized, and is more likely to be caught out if fronting than where a company submits a tender to a government department, and includes falsified information. It is most likely that the customer will identify an invalid scorecard, or even a competitor. A verification agency will also examine certificates to see if there is an indication of fronting.
Most incidences of fronting are due to fronting activity 1, not 2. A broad-based scorecard is less likely to be fronting than a share certificate.
The best way to reduce fronting is for government to follow the B-BBEE scorecard approach.
27th January 2010 and Fronting
Posted by Keith in Accreditation, BBBEE Knowledge, Fronting, Verification on August 16th, 2010
1st February was a landmark day in the history of B-BBEE in South Africa. It was from that date onwards that only certificates issued by accredited verification agencies, or those in possession of a valid pre-assessment letter, would be valid.
Prior to that date other certificates, even if issued by a non-accredited agency or self ratings or BEE consultant swould be acceptable.
It is therefore quite interesting to see how many certificates were produced by consultants in the final three days before the deadline. We have seen more certificates dated 27th,28th,29th January than any other date! (30th January was a Saturday explaining why the 27th and 28th January were such popular dates). When I see a certificate dated 27th or 28th January, I examine it in a little more detail. This is not to say it should be rejected, but I am sceptical over the volume of certificates produced over that time. I look especially for certificates that do not use decimals in their calculations, or those where all the points have been earned for any one element. The mix of how points were earned is another indicator of fronting. For example if a company has earned all 23 points on ownership, but gets less than 2 points for management control, there is sufficient reason to want to double check the data. The codes do say that the measured entity must hold suitable evidence or documentation to prove their score. If they do not have the proof, then the entire scorecard must be rejected.
We do have a letter from the dti confirming that certificates produced prior to 1st February 2010 remain valid. If your verification agency does not accept certificates produced by non-accredited agencies prior to 1st February 2010, email us and request a copy of that letter.
Fronting is misrepresentation of one’s BEE position and is considered fraud. We have come across an interesting situation recently. In this case, they did not choose the 27th January date for their BEE Certificate, but used 30th November 2010 as the date on their certificate! Back-dating a scorecard is one thing, but forward-dating it is a recipe for getting caught out! A bit more research showed that they used the identical certificate last year with a date of 30th November 2009l. The certificate purported to be from EMEX (a very reputable verification agency), and was obviously forged. Investigations are continuing, and it is currently impossible to state who is at fault here, but there is no doubt that this certificate is not valid, and does not give the true BEE situation of the company.
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