In Business Today

BEE Verify

Getting down to the nitty-gritty details of Black Economic Empowerment (BEE) was the focus on the second and final day of the first Annual BEE Conference, held at Johannesburg’s Pyramid Conference Centre this past Wednesday and Thursday.
While day one covered the history and basics of BEE, during yesterday’s session (SUBS: THURSDAY) delegates and speakers tackled the nuts and bolts of BEE, focusing on details such as how the BEE verification process works and where the likes of Skills Development, Employment Equity and Enterprise Development fit in to the process.

It was just what delegates were waiting for. Comments at the end of day one ran along the lines of “interesting but we know all this already”, but during day two there wasn’t a disinterested eye in the house as expert speakers were flooded with questions following their presentations.

Many of those questions were directed at Murray Chabant, co-founder of BEE South Africa (BEESA), one of the country’s leading BEE consultancy and verification organisations, who was there to lead delegates through the verification process.
With the BEE codes only recently published, and no verification agencies yet accredited, the BEE ratings system is not yet operating as it ideally should but Chabant said that as long as companies were careful and discerning in choosing a verification agency, problems should be kept to a minimum.

“At the moment we are going through a transition period,” he said. “We should see a list of accredited agencies as soon as February 2008 which will make it a lot easier for companies to feel comfortable in engaging their services.
“Also, I should point out that companies do not yet have to go through verification, it is not a law. Verification, however, is encouraged and I believe it is in a company’s best interest to do so. It’s not an official process – yet – but government has said that all verification certificates done before February 2008 are valid for one year.”

Despite there being no list of accredited agencies as yet, Chabant pointed out that companies wanting to be rated before February 2008 could feel safe in doing so as long as they selected their agency with due care.“First of all, if any agency claims to be accredited, kick them out the door because they are lying to you,” he said. “What companies need to do is use a credible agency and I would suggest only using agencies that are members or associated members of our industry body ABVA (the Associated Body of Verification Agencies, on the Internet at www.abva.co.za). These are the agencies that will, for the most part, receive accreditation next year.

“I cannot stress this point strongly enough – choose with care. I know of a case in which a company approached an agency and were told it would cost them R7000; members of ABVA, however, would charge around R500 for the same service. Be very careful of being taken for a long and expensive ride.” Chabant explained that verification agencies are just that, they are there to rate and verify a company’s level of BEE compliance based on the recently gazetted codes, not to formulate a BEE strategy.
“That is the company’s job, or the job of the consultancy firm hired by the company,” he said. “It would be unethical, a serious conflict of interest, for any verification agency to do both for one client.

“BEESA, for instance, works in both the verification and consulting fields and if we have a consultancy client we would immediately refuse to act as a verification agency for that client because we have been too closely involved in setting up their BEE strategy.“And there’s a big difference between consultancy and verification. To put it simply: verification tells you what you still need to do; consultancy tells you how to do it.”

With the verification process yet to be formalised, many companies are currently forgoing the services of agencies and relying on self-assessment. Unfortunately, self-assessment doesn’t count unless verified.“The only time self-assessment can count is if the BEE scores are substantiated with documentary evidence. You cannot simply present a score and hope everyone will take it as is; you have to be able to back up your claims.”

While much of the session was spent focusing on what companies need to do to make the verification process as painless as possible, Chabant also touched on the importance of standardising the system.“It all ties in to the industry’s credibility,” he said. “We cannot have a situation where one agency gives a specific company one score while another agency gives the same company an entirely different rating.“If that happens there will be no confidence at all in the process and without proper verification, through a process that the majority of business see as fair and impartial, there is little point to BEE.”

Disclaimer: In Business Today disclaimerThe In Business Today section is reserved for relevant company announcements and releases. Companies are not entitled to have their announcements published in this section, but from time to time, these may be selected by Moneyweb for publication in the interest of the Moneyweb Community of readers. The copy has not been generated by Moneyweb nor should be attributed to Moneyweb. Nor has the information contained therein been verified by Moneyweb journalists. 29 January 2007