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CEOs of financial firms might be held accountable for BEE

A parliament committee places transformation and BEE objectives on the CEO and imposes sanctions for non-compliance.

The buck might soon stop with CEOs of financial services firms for the fast-tracking of transformation and black-economic empowerment (BEE), which has been widely considered to be slow and resulting in skewed ownership patterns of the economy.

This is a major recommendation by Parliament’s Standing Committee on Finance and the Portfolio on Trade and Industry contained in the first report of the financial sector transformation, which is the antithesis of the current status quo and a sign that Parliament is upping the ante on BEE compliance.

The committees have supported National Treasury’s proposal that CEOs should be active in the decision-making processes of the Financial Sector Charter (FSC) Council, which oversees transformation and BEE in the financial services sector, to “ensure sector buy-in”.

CEOs are part of company boards but a dedicated team of directors is part of the Social, Ethics and Transformation Committee, which is a sub-committee of the board that drives transformation.

The recommendations of the committees place transformation and BEE objectives on CEOs. This is a positive move, said Cas Coovadia, MD of the Banking Association SA (Basa).

“We don’t have a problem with this recommendation as we believe that transformation needs to be about the way we do our business to ensure that we are actually doing our business with cognisance of the environment in which we work,” Coovadia told Moneyweb.

Basa, along with commercial banks, made submissions to parliament in March during public hearings to assess the progress of transformation in the financial services sector.

The committees recommend that the industry be compelled to provide the necessary information about their transformation and BEE compliance to the FSC Council, the newly-established BEE Commission and any other relevant state structure.

In cracking the whip, the committee has also recommended sanctions be imposed for non-compliance to BEE under the Financial Sector Charter and the BEE Generic Codes. Transformation and BEE compliance is a choice for companies and widely viewed as the right thing to do and there are no punitive measures for non-compliance.

The BEE Commission is expected to develop a system of fines for non-compliance and present a policy on this by June 2018.

Coovadia said the implementation of BEE by companies since the early 2000s has not had a broad-based focus, with many companies focusing largely on the ownership element while ignoring other seven BEE elements. These include management control, procurement, skills development, enterprise and supplier development, socioeconomic development, access to financial services, and empowerment financing.

“The concentration of the ownership element is too narrow. BEE is about looking at the demographics of your staff, particularly at management level. And BEE is about ensuring that we finance homes for the majority of the black population, development of small and medium enterprises and skills. These are central to the businesses of banks,” said Coovadia.

In March, the FSC Council signed off on the final amended 2013 BEE code for the financial services sector. The big change was that the ownership requirement for previously disadvantaged individuals in the amended BEE codes is 20% compared with 25% for the generic codes.

Asset management industry 

Another significant recommendation is for state assets to be managed by asset management entities that are at least 51% black-owned. This is intended to nurture black-owned asset management firms by giving them funds to manage over many years and help them to build critical mass.

Sibongiseni Mbatha, the president of the Association of Black Securities and Investment Professionals, said black managers could increase their market share in SA’s investing and savings industry “three-fold in the next 18 to 24 months” if state-owned enterprises like Eskom and Transnet included black firms in the management of their pension and provident funds.

“The private sector has to follow on this recommendation for black asset managers to manage private assets,” said Mbatha.

The asset management industry has a checkered transformation record with a recent survey by 27four Investment Managers showing that black firms control R416 billion of the R4.6 trillion savings and investments industry.

Several of the committees’ recommendations will be reviewed before the Financial Sector Summit is held in the first quarter of next year, where the committees will engage with the Department of Trade and Industry and Treasury to finalise a second report on the financial sector transformation.

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The results can be nothing but bankruptcy and the implosion of the state, if taxpayers are constantly bullied and harassed by politicians with a victim complex. Voters with a victim mentality and a sense of entitlement misuse the legislature to bully the same institutions that are expected to create jobs and fund social grants. South Africa is ruled by people with a dysfunctional mindset who use the law to steal from themselves.

“Victim mentality is a psychological term that refers to a type of dysfunctional mindset which seeks to feel persecuted in order to avoid self-responsibility.”

“A Stanford University study reported in the Journal of Personality and Social Psychology found that playing the victim leads to a sense of entitlement and to selfish behavior.

The same paper went on to review a collection of studies showing that all the things that make someone feel wronged, including disrespect, unequal treatment, disproportional income, diagnosis of a disease, and an unhappy childhood, make people feel more entitled to special treatment. And if they don’t get that special treatment—watch out.

They will lash out in anger, guilt you into obligation, and reverse bully you until you do what they want.” – Isaiah Hankel

Your Point BEING????????

If you don’t get the point you must be one of those needing BEE.

Well 46 ups at 2.02pm understood. What is wrong with 1+5?

I totally agree with Sensei. The brain dead who are destroying our country piece by piece have no clue about business, their idea of business is ‘what’s my cut!’ When the Afrikaners found themselves at an economic disadvantage in the 60’s they formulated a plan and got stuck in. They did not ask the English for a cut in their businesses. The result was an economic transformation in SA.

and look at where we are today!!!!! very clever comment!!!! you must have got 100% for critical thinking in Grade R!!!!!!!

Woogoodly, you are very good at putting !!!!!!!! or ??????? but offer nothing of actual substance in return. Sensei and Foshan have raised very relevant points, which you choose to simply ignore or just simply cannot fathom. You have every right to disagree, but it may serve you (and the community) better if you can provide legitimate reasons/alternative views instead so we can appreciate what makes you come to the conclusions you do. Currently, you just come across as a rather dim-witted, arrogant individual (not a good combination).

Woogoodly, when it dawns on you that those who support BEE policies are in fact stealing from themselves, you won’t support the ANC any longer. I am sure that a person with your intellect can describe the ways in which ANC supporters are plundering themselves with BEE codes. I am timing you, but I am not holding my breath…….

woodly where are we now?

Sensei- exactly right! And what is amazing is the victim mentality is increasing not decreasing.

Blatant racism by some people, too useless and too cowardly to paddle their own canoe.

Cannot get anywhere in life without draconian and dictatorial edict.

Yuk.

Not much different from Zimbabwe’s 51% indigent policy. The result will be the same.

…this specific BEE objective (like many others) may later be blown out of the water by the IMF (…won’t be long now) being regarded as impediments to economic growth. Along with anti-business rhetoric & other socialist red tape.

There’s little need for BEE anymore. Seriously, after 23 yrs still required to be helped along? Are my fellow Africans so bad, that they cannot look after themselves, with laws protecting the majority? High time for African business to rise (without BEE deals) and be successful. The majority should now be able to create their own wealth in business & give the rest good competition. How’s that? Then SA will have good growth & prosperity.

They grew so used to the process of looting that they do not realize they are actually looting themselves now. The ownership demographics of the largest companies changed over time. The government employees pension fund is the largest investor in South Africa, which means that the majority of the owners of local businesses are government employees.

What these ANC supporters are actually busy with, is making laws to force themselves as owners of listed companies, to give part of their assets and part of their retirement income to people with a slave mentality. They are in fact stealing from their own assets to bribe fellow ANC supporters.

The second way in which they are stealing from themselves is by creating a toxic environment for the companies they own in their pension funds, to do business. They themselves are responsible for the poor performance of their pension funds because they support legislation that forces them to steal from themselves.

This is the ANC for you, a rabid dog chasing it’s own tail, believing it is way ahead in the race.

It is time for all those non – BEE people to head out for greener pastures and let all the BEE types get on with it. It will all go fine I am sure.
This salami slicing is driving me crazy.

Just the Black Elite squabbling for more free money – soon Moody’s will have us downgraded to BEE3 rating (leprosy),

BEE Commission to gain ANC votes into the next election,…deception to the masses, to pay their masters.

“The private sector has to follow..” can this be read as a thread or friendly warning to what is to come in the future of business, and the economy as whole?

This ANC/BEE commission is looking for shortcuts and seeking the easy way out for as Sensei put it “the Victim mentality”, the understanding of value to things is what we worked hardest for, freebies is the toys we left at a friends house, the toys we bought with hard earn money, were the ones we took care of.

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