Action should be taken against non-compliant companies

Monday, March 27, 2017

Pretoria - Action should be taken against companies that are found not to be complying with the Broad-Based Economic Empowerment (B-BBEE) requirements for transformation, says Trade and Industry Minister Rob Davies.

Speaking at a session held by the B-BBEE Commission in Midrand on Friday, Minister Davies said the state of transformation in the economy remains a challenge.

“It was important for us to put it in the Act that the B-BBEE Commission should be able to get information that will enable the regulator to tell us what the state of transformation is in the country.

“So far, the Commission has only received 27 reports from the Johannesburg Stock Exchange (JSE) listed companies, and that is not able to give us a holistic view of what transformation is in South Africa,” said Minister Davies.

He said the Commission needs to deal with verification agencies that are found to be promoting misrepresentation and fronting by issuing B-BBEE certificates that do not give a true reflection of the transformation status in companies.

“Our economy is still characterised by monopolies, we do not have inclusive growth. We need to industrialise and grow the economy but ensure that we give people equal share to participate and be real players in the economy. We need to know that we can rely on the scorecards, that they are a true reflection of where we are in terms of transformation,” he said.

The Acting Commissioner for the B-BBEE Commission, Zodwa Ntuli, said the Commission takes the role of the B-BBEE legislation seriously. This in relation to breaking into the levels of concentration by facilitating new entrants.

She said the Commission has already initiated investigations into cases of fronting and is targeting the verification industry.

B-BEE certification web portal

The Commission has developed a B-BBEE certification web portal that will be linked to the database of the National Treasury. The portal will allow government and State-owned enterprises to also go on to the B-BBEE website to verify the legitimacy of B-BBEE certificates from suppliers.

The portal will be effective from 1 April 2017 in an effort to try to reduce fraudulent B-BBEE certificates.

Findings on the state of transformation

Presenting the findings of research on the national state of transformation, Carla Mould, who is the Chief Operations Officer for “Who Owns Whom”, said based on the sampling of some of the JSE listed entities, there has been a slight improvement in terms of B-BBEE recognition level for the April 2014 to March 2015 period.

The study also indicated a minimal increase in black female directorship and a decrease in black male directors, with white directorship still on the increase.

The commission was announced by Minister Davies in October 2015. At the time, Minister Davies said the Commission will deal with fronting, fraud and other issues that affect BEE.

The Commission has the ability to address fronting as well as to introduce mechanisms to prevent it from happening.

Speaking at a media briefing last year, Ntuli said if a company is found to be fronting, there is a provision for a fine of 10% of the turnover.

Individuals in the company could also be imprisoned for 10 years. Companies can also be penalised from doing business with government for years. –

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