New B-BBEE Bill avoids circumvention of the law

lionel octoberB-BBEE legislation needs overhaul…

Director General Lionel October led the department of trade and industry’s (DTI) presentation on the new B-BBEE Amendment Bill  to the portfolio committee on trade and industry, stating that the anchor BEE legislation in place for some ten years badly needed a “proper mechanism to support the actual implementation of black empowerment and methods to deal with non-compliance and circumvention”.

He said the new changes resulted mainly from the work of the President’s Special Advisory Council charged with investigation into the areas where monitoring, evaluation and reporting were clearly ineffective, resulting in a need and to introduce penalties and criminalise those who purposely made false declarations.

Maximum penalty only set by Bill

The Bill, he said, set the maximum penalty but it was up to the courts to set penalties according to circumstances’.

The purposes of the new Bill was to give further effect to the aims and objects of black empowerment legislation, said October, and especially to improve monitoring and evaluation of SA business and industry on the subject; strengthen access to procurement opportunities for black business with focus on opportunities; and funding to improve the technical capacity of the verification industry.

NEDLAC, BUSA, Black Business Council and government departments had been consulted, including all departments in the economic and employment “cluster”, he said.

Most agree changes needed

October said that public hearings had also been conducted. On the whole, these  submissions in broad principle had supported the necessity for amending legislation with a certain number of changes being acknowledged as badly needed, mainly because of misunderstandings particularly in the area of verification and scoring and to clear up a number of unintended consequences of the original Act.

Nomande Mesatywa, chief director of B-BBEE at DTI, told parliamentarians that the objectives of the Bill were to line up other legislation impacting on B-BBEE and also to line up with the Codes of Good Practice.

The Bill established a B-BBEE Commission to monitor and evaluate black empowerment as practised; to deal with non-compliance issues and circumvention and give effect to government policy on the issue of black business empowerment.

Material amendments included a whole number of key definitions and re-definitions and matters regarding the establishment of the B-BBEE commission office.

MPs complain of racial bias

A number of MPs complained that definitions included that of black persons, defining them as black, coloured and Indian, which was simply re-introducing racially based legislation based on skin colour.

October said DG had no option but to follow procurement legislation where the scorecard used such determinations. He said that South Africa was not returning to such levels as had been practiced “in the bad years” but it was now the option or choice of business in terms of a scorecard system whether to do business with government or not.

He said that South Africa was not like Malaysia or Zimbabwe where only nationals of a certain skin colour or nationality could do business with government.

MPs still disagreed with DTI and said not only was the legislation racially based but it disenfranchised white persons from an opportunity that was their constitutional right.

Furthermore, there was a differential between national and foreign business where one’s nationality was prejudicial in dealing with government on tenders and this was bad for investors to see and contributed to the idea that South Africa was unfriendly to foreign investors.

Fronting the main problem

Again, DTI rejected such notions stated by opposition MPs, October defending the proposals in that the B-BBEE legislation before them was mainly aimed at those attempted to defeat the regulations on “fronting” and by supplying false information when submitting scorecard facts. It also remained purely an option for business whether it wished to comply or not with the scorecard system when applying for government business, which he confirmed amounted to some 45% of GDP.

He concluded that it was important for government to have a B-BBEE commissioner as a party to investigate, regulate and impose penalties on those who wished to defeat the purpose of the legislation and who wished to counter government policy on the necessity to empower middle class black development; black small business development and therefore improve the black contribution to GDP.

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