Tuesday, 23 May 2017

Radio

JSE-listed companies lax in B-BBEE compliance

Siki Mgabadeli




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SIKI MGABADELI:  The B-BBEE Commission says it will take action against non-complying JSE-listed companies. The amendment act requires JSE-listed companies to report on their compliance in terms of B-BBEE to the newly introduced commission. The format of reporting is yet to be prescribed but, given the requirement for public entities to do so in their annual reports, one could expect a similar requirement on JSE-listed companies. But of approximately 400 listed companies only 27 have reported.

Let's chat to Lianne Levenstein, who  is CEO of EconoBEE. Lianne, thanks so much for your time today. Twenty-seven sounds rather shameful. What do you think the issue is? Is it that they don’t feel that they need to do this?

LIANNE LEVENSTEIN:  It is a very, very low number. The number of 27 was announced about two months ago at an event that the BEE Commission and the dti had in terms of the state of transformation.

Since then I think it's probably been a combination of companies now being informed – which is a bit surprising – that they need to do their submissions, the number has actually increased. It increased to a sum total of 50, which is still in my opinion a very, very low number.

SIKI MGABADELI:  What does the reporting entail? What sort of information do they need to provide?

LIANNE LEVENSTEIN:  All JSE-listed companies and organs of state need to report on their compliance to the BEE Commission. They need to report how they are doing in terms of the five elements as issued by a verification agency. The template isn’t too complicated. It's about two or three pages of information. But it is a compliance report to the BEE Commission.

And what they are supposed to do from there is put together a report of how many companies have complied, what levels they are, where they are lacking potentially on ownership, potentially on enterprise and supply development. That’s really the end result of all of this.

SIKI MGABADELI:  Are there consequences for non-compliance?

LIANNE LEVENSTEIN:  The act does allow and does test the powers of the BEE Commission to take action on JSE-listed companies who have not complied. At the moment what I'm seeing is in effect not a naming-and-shaming, but a praising of the companies that have complied.

At the event that I was at about two months ago, they put up of all of those, the 27 companies which at that stage had complied.

SIKI MGABADELI:  Compliance to this – does it equate to actual transformation in organisations?

LIANNE LEVENSTEIN:  That is a very, very interesting question, because I have read this piece of legislation many, many times. It says a “compliance report”; it doesn’t say that the entity itself necessarily needs to be compliant. So in a way a non-compliance certificate – which, just to be correct, I am fully against – is still a report on compliance.

I don’t know how the BEE Commission is then going to take action against a Level 8 or a Level 7 or a non-compliant. Right now I think they just want to gather the information. And, as you mentioned, out of 400 companies 27 or 50 is still a very, very low number.

SIKI MGABADELI:  What's interesting, though – obviously the Commission said not too long ago that they would get the minister to enforce legislation where companies that are not compliant would then not be getting government contracts. Is that enough of a stick to get people to comply?

LIANNE LEVENSTEIN:  I think the way that things are going there needs to be the stick, and it needs to be forced upon people to comply and to get not only a certificate but a good score.

At the moment the PPSA, which is a different act, basically the tender act, does award tenders based on a score card. Let's say, for example, you’ve got two competitors, one who is a Level 8 and one who is a Level 4, the Level 4 is more likely to get that business from government than a Level 8, based on the PPSA.

SIKI MGABADELI: Okay, we'll leave it there. Thanks, Lianne. Lianne Levenstein is CEO of EconoBEE.

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