Policy uncertainty, specifically in the BEE world

If we don’t approach the courts policy, uncertainty will be the only certainty we know and the transformation whipping stick will be wielded with more veracity.
The author has had enough of the ‘unregulated and unlegislated power’ of the South African National Accreditation System. Image: Shutterstock

Is this another story about how the Minister of Trade, Industry and Competition claims that South Africa is open for business, while his minions make it almost impossible for companies to do business in South Africa? Of course it is.

Is it an article about how South Africa is plagued by policy uncertainty? Absolutely.

And is the article about a complete lack of consistency when it comes to measuring black economic empowerment progress? Naturally.

It’s trite to say that it’s very difficult to do business in South Africa without a tax clearance certificate or a BEE certificate.

The tax clearance certificate is easy enough to sort out: if you are up to date with your tax obligations, then you’ll get one. However, getting a BEE certificate is a lot more complex and expensive, and in many cases doesn’t attract any tax breaks from the South African Revenue Service (Sars).

Companies measure their BEE performance on an annual basis by consulting the correct BEE code of good practice, implementing what they need to over a 12-month period, and then submitting this information to a BEE verification agency to allocate the necessary points.

What the public doesn’t know is that the verification agencies are granted a licence to operate by the South African National Accreditation System (Sanas), and this is where things get very complicated.

The reason Sanas was awarded this task about 15 years ago is now shrouded in the mists of time. On the face of it there is no logical reason why Sanas should have this responsibility.

Mandate

Sanas, an entity within the Department of Trade, Industry and Competition (dtic), exists by virtue of the Accreditation for Conformity Assessment, Calibration and Good Laboratory Practice Act, 2006.

The act’s preamble explains Sanas’s mandate as:

To provide for an internationally recognised and effective accreditation and monitoring system for the Republic by establishing Sanas as a juristic person; to recognise Sanas as the only accreditation body in the Republic for the accreditation of conformity assessment and calibration and monitoring of good laboratory practice; and to provide for matters connected therewith.

The act has yet to be amended to incorporate the maintenance of standards within the BEE world via the verification agencies. A simple reading of the act will show this is mostly concerned with the accreditation or monitoring for (sic) GLP (Good Laboratory Practice) compliance purposes.

If the reader is able to extend their mind to this process then it makes sense that at the very least Sanas’s BEE remit is to make sure that the process of BEE verification follows the prescripts as defined by the BEE codes and supporting documentation.

However, Sanas has taken upon itself to be a lot more than that …

They have decided that they are now the source of final interpretations of the BEE codes, thereby codifying the legislation.

This is not done by informing the public of their interpretations, but by issuing non-conformance certificates after a verification agency has issued a BEE certificate.

At that point neither the verification agency nor the company it assessed had a clue that they had fallen foul of Sanas’s unregulated and unlegislated power.

The stories of Sanas abuse are legion.

Examples include that Sanas has issued directives to their verification agencies dictating that the 12-month period needs to be a financial year.

Another directive attempts to rewrite the various BEE codes when it comes to the measurement of targets for enterprise/supplier and socio-economic development targets.

Yet another has seen Sanas insisting that a BEE verification needs to be completed before the beginning of the new financial year.

Those are examples that I know about.

Infamous ‘non-conformances’

Sanas has been known to provide such directives to individual verification agencies in the shape of the infamous non-conformances that they are so wont to hand out. The consistency of these non-conformances (or encees [NCs] as the verification agencies refer to them) is at best inconsistent. Sanas refuses to publish these individual ‘encees’.

That fact that no BEE code supports any of these interpretations appears to be of little concern to either Sanas or the dtic.

In effect these decrees have become de facto amendments to the BEE codes – something that the BEE Act is clear can only be done by virtue of a formal gazetting process. In fact Section 9(5) of the BEE Act makes it absolutely clear that interpretations must be formally gazetted.

The only way forward

As with most things, the only way that this is going to be rectified is to approach the courts. Which is exactly what SERR Synergy did.

A recent order of the court stated:

It is declared that Sanas has no power in terms of the Broad-Based Black Economic Empowerment Act No. 53 of 2003 (“the BEE Act”) or any other legislative instrument to prescribe the measurement period that must be taken into account when verifying an enterprise’s compliance with the BEE Act or the Codes of Good Practice issued under the BEE Act.

It’s important to note that neither Sanas nor the Minister of Trade, Industry and Competition opposed this application, leading me to believe that they knew that this was a fight that wasn’t worth fighting.

The order was made on 22 March 2022 and we are still waiting for a directive from either the dtic or Sanas withdrawing this so called directive that the court refers to.

Unfortunately this directive does not go far enough and so we must approach the courts for another directive instructing both the dtic and Sanas to refrain from any type of directives and interpretations and withdraw every one that they may have issued up until now.

I often turn to this quote which is attributed to Paul Hoffman SC, a director of Accountability Now:

A critical element of the rule of law is that there should be certainty about what the law is and what it requires, both procedurally and substantively. This involves consistent conduct by those in positions of authority, a uniform interpretation of the provisions of laws and a respect for precedents that are set in decisions made in cases of similar nature.

The rule of law is not something that our government is particularly concerned with, specifically the dtic.

It’s the courts that seem to be the ultimate arbiter in these matters.

If any reader would be interested in supporting our court action please contact me (paul@caird.co.za) and we’ll move ahead. If not, then policy uncertainty will be the only certainty we know and the transformation whipping stick will be wielded with more veracity.

Paul Janisch has been a BEE consultant for the last 20 years. He is perpetually wrongfooted by arbitrary Sanas pronouncements and wants to put a stop to them.

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BEE belongs in the dustbin. South Africa cannot afford this pernicious policy. Country slowly dies.

BEE policies are both racist and out of date. They might have been the blue print for change and economic transformation 30 yrs ago but are now prohibitive.
We need to get with the program and employ those with experience and know-how no matter the colour of their skin. It is the only way for us to rebuild our economy and encourage the growth and success of biz SA.and tax payers in this country. Without taxes you have nothing…no social grants, no growth and nothing to steal.

The concept of BEE was agreed to by the leading industrialists at the time to avert a disastrous nationalization drive by the communist ANC. When you unexpectedly come to own 30% of a proven business model, all of a sudden nationalization is not in your personal interest anymore. Those leading industrialists used BEE to buy time to move the bulk of their assets offshore. Like a lizard, they dropped the tail to save the body.

BEE was never supposed to be a viable long-term solution. It was only supposed to be a decoy. Now we have an entire economy built upon decoys. Our entire economy has been structured around the lizard’s tail. They crowd around this lifeless tail like flies on rotten meat.

End of comments.

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