Most of us who are in the Black Economic Empowerment advisory or consulting field would agree that BEE has not really achieved what was originally intended. In fact, one of the most unfortunate consequences has been the different types of fronting. As such, on 9 December 2011, the Department of Trade and Industry minister, Dr Rob Davies, gazetted the Broad-based Black Empowerment Bill, for public comment. One of the Bill's main purposes is the establishment of the Broad-based Black Economic Empowerment Commission, aimed at prohibiting fronting practices.
The Commission will be established as a juristic person to function as a state organ within public administration, but as an institution outside the public service. It is headed by a commissioner (appointed by the DTI minister), on a five-year term. The minister will also, in consultation with the minister of Finance, decide on the commissioner's remuneration. The commissioner is responsible for the general administration of the Commission and for carrying out any functions assigned to it in terms of the Act.
According to the Bill, the Commission is subject to the Constitution and the law, and the minister’s policy statements and directives. It must also be impartial and perform its functions without fear, favour or prejudice. In practice, this may clash with the minister's provisions. The format and the procedure to be followed in any investigation by the Commission must be decided upon by the Commission itself, with due regard to the circumstances of each case.
The BEE Bill gives the Commission the discretion (with ministerial permission) to delegate its duties and functions to any person, body of persons or any other organ of state, including the Special Investigating Unit (SIU).
In its investigations, should the Commission be able to make any findings as to whether a BEE transaction involves fronting practices, it may institute proceedings in a court of law to restrain any conduct in breach of the B-BBEE Act of 2003. If the Commission thinks that any matter that it has investigated may involve the commission of a criminal offense, it must refer the matter to the National Prosecuting Authority (NPA) or the relevant sector within the South African Police Services (SAPS).
The Commission may also refer to:-
- the South African Revenue Services (SARS); and
- the Independent Regulatory Board of Auditors (IRBA).
Other functions of the Commission will include:
- supervising and promoting adherence to BEE rules;
- maintaining a registry of major BEE transactions; and
- receiving and analysing the reports on BEE compliance, which will have to be submitted to it by state organs, public entities and private sector enterprises.
On the Codes of Good Practice, the DTI recently gazetted the amended draft BEE Codes for public comment for a period of 60 days (ending 6 December 2012). The purpose of the Codes is to assist and advise the public and private sectors in their implementation of the B-BBEE Act. A number of radical changes have been proposed and it would appear that, owing to the lack of transformation in the South African economy, the approach is more of a stick as opposed to a carrot. There is an old Chinese proverb which states “May you live in interesting times”, and it would appear that the current way in which companies approach BEE will no longer be an HR function. Directors at the board or executive level will now have to apply their minds to ensure that their organisations remain competitive and implement BEE in the originally intended way.
Israel Noko (CEO & Managing Consultant: NPI Governance Consulting (Pty) Ltd) is passionate about the intentions behind Broad-based Black Economic Empowerment (B-BBEE), and the economic transformation of South Africa. Noko’s experience has focused on developing and executing strategies which will enable companies to better position themselves in the market, and develop partnerships with companies and organisations that want to implement ‘business-sense’ enterprise development, socio-economic development and BEE strategies. He has also advised on BEE joint venture structures, company formations and reorganisations. Noko is the chairman of the National Association of BEE Consultants (NABC), and sits on the DTI’s BEE Joint Technical Committee. USB-ED has recently, in partnership with the NABC, presented a consultation session around the amendments gazetted by the DTI.