Donwald Pressly
The changes to black empowerment legislation to criminalise fronting had little to do with white-led businesses failing to achieve transformation or being guilty of cheating, Trade and Industry Minister Rob Davies said yesterday.
However, the Broad-Based Black Economic Empowerment (BEE) Amendment Bill provides for jail terms of up to 10 years or up to 10 percent of a company’s turnover for fronting and also establishes a commission to police the process.
And Davies complained that transformation levels among businesses were pretty low.
Fronting occurs when a company pretends to be compliant with BEE legislation by placing black people in positions that would make it seem as if they either own the company, or are at a level to make decisions in the company.
Key legal tests of criminality would be “knowingly doing so”, and providing false information in this regard to garner a state contract.
Davies and department director-general Lionel October argued that amending the legislation also cut away the red tape associated with BEE.
For example, the legislation, which was debated by the National Assembly yesterday afternoon, did away with the need for a business to apply to a verification agency to receive an empowerment certificate, “which can cost R40 000”, Davies said.
Those empowerment credentials will, in future, be taken as given.
Noting that the empowerment requirements only applied to companies that sought to do business with the government and parastatals, he said: “It doesn’t apply to a plumber who wishes to serve only white suburbs.”
Asked if the legislation was an indictment of white business and “tightens the screws on white business”, Davies told a media conference: “We are not making a generalised statement on that matter. We are saying that a number of companies have been sincere about promoting BEE but there are some bad apples… companies that have presented themselves as something they are not.”
In terms of the legislation, a new broad-based BEE commission will be set up to police the progress made in empowerment in terms of the BEE scorecard, with emphasis falling on skills development as well as ownership, enterprise and supplier development.
Joan Fubbs, the trade and industry portfolio committee chairwoman, noted that “all the opposition parties” had objected to the race clause in the legislation. “That clause was where we specifically point out what black people are in the apartheid law: Africans, coloureds and Indians and then the Chinese.”
But the opposition, including Cope and the DA, said the entrenchment of the race-based definition in the bill – even for reasons of redress – was unfortunate.
While Fubbs rejected the notion that BEE “has destroyed all opportunities for whites”, saying this was “utterly fallacious”, DA spokesman Wilmot James said his party would have preferred a definition of “disadvantaged” rather than race as the basis for empowerment.
Responding to Fubbs’ jibe that the DA had backtracked, he said: “We lost that battle [over the race definitions]… there is no backtracking here.”
Too often, he argued, a small black elite had enriched themselves as a consequence of the existing black empowerment legislation.
IFP finance spokesman Narend Singh said that black empowerment had not proved to be broad-based in the past but focused on an elite. “This bill goes a long way in addressing that concern,” he said.