[miningmx.com] – TRADE and Industry minister, Rob Davies, made an about turn regarding the downward adjustment of black economic empowerment (BEE) points and said the status quo will be maintained.
“I admit BEE is something we carefully need to explain to investors,’ Davies said today during a meeting with the parliamentary oversight committee on trade and industry. “We had a glitch, we’re acknowledging it. Let me apologise. We’ll do better next time.”
On Friday the Department of Trade and Industry published a retraction of a previous statement it had made in the Government Gazette, stating that companies would be awarded fewer BEE points if black shareholders were community trusts or employees and not individuals.
The original announcement, which was made on 2 May, caused alarm in business and economic circles and companies feared their existing empowerment credentials would become worthless.
Trade and industry director general Lionel October, who was also part of Davies’ delegation to parliament, reiterated that the announcement 2 May announcement was withdrawn and that there should be clarity about the BEE requirements.
“We have provided legal certainty to the issue of how many points a company gets. They will get the full 25 points for broad-based ownership. We clarified the matter – the status quo exists and we won’t focus on ownership points, but rather on fronting provisions.’
Davies assured MPs his department does not intend on “closing down’ a company if it doesn’t have 40% BEE representation. “What’s the point of just ticking a box? We want to instil new kinds of behaviour.’
He acknowledged the importance of collective and community schemes. “We don’t want to recycle a bunch of individuals, but rather address dodgy Esops (Employee Stock Ownership Plans) and employee share programmes. It’s fair enough if empowerment is broad, but sometimes it could be verging on not providing people in these schemes with real benefits and assets.’
During question time Geordin Hill-Lewis, the DA’s shadow minister of trade and industry, laid into the department for creating “two weeks of complete confusion’ and said Davies should make a concerted effort to give clarity to the business community about the BEE.
“You should explain to them how this messy confusion came about and what the current situation is.”
He later told Miningmx he was pleased that Davies conceded the department had exacerbated the confusion around the new BEE codes.
“Unfortunately, much of the damage is already done, and many business people in South Africa are despondent and angered by the confusion of the last fortnight. And many of them are still none the wiser as to what is actually expected of them.’
