Broad-Based Black Economic Empowerment Amendment Bill: deliberations

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Trade and Industry

07 May 2013
Chairperson: Ms J Fubbs (ANC)
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Meeting Summary

The Portfolio sub-committee on the Broad-Based Black Economic Empowerment Amendment Bill (B-BBEE A/B) said its point of departure for the sub-committee had been the submissions received in public hearings and the Department’s responses to them. There had been general consensus that the Broad-Based Black Economic Empowerment Act was a necessary tool to address past injustices and advance economic development. Two issues still needed to be deliberated by the full Committee -- that of the removal of the term ‘black’ from the title of the document, and that the amendments should include a sunset clause. Malaysia was noted as having dealt with empowerment successfully and the sub-committee recommended a study visit to Malaysia.

Members noted that their concern was not in the title but the amendment of section 1, clause 1(c)(e) on preferential procurement. The problem with the clause was that it designated preferential procurement for black ownership and black management, whereas eligibility was based on a scorecard which included black ownership and management -- but also included training, education and skills development, and  therefore the clause would override the scorecard. Members proposed that the words ‘born before 1994’ be added to 1(c)(e) after the words ‘black people’. This would be a strong signal that the country believed in the youth for the future and that the ‘born frees’ were being recognised and being allowed to live free. Members said the transformation of society was not an event (i.e. 1994) but needed to change the effects of 350 years of apartheid, and this was only the beginning of a long process. Members said all bills had a review period and therefore this acted as a tacit sunset clause. There was then a discussion on where the codes fitted in with reference to legislation and on the fact that the Minister had to give permission to set qualifications which exceeded the standards, and these were restricted to public entities.

Assisted by representatives of the State Law Adviser’s office, the Members discussed the various Sections and Clauses of the Bill, and agreed on the proposed amendments.

Meeting report

Deliberations
Sub-committee report
Mr B Radebe (ANC), the sub-committee chairperson, said the point of departure for the sub-committee was the submissions received in public hearings and the Department’s responses to them. There was broad consensus that the Broad-Based Black Economic Empowerment Act was a necessary tool to address past injustices and advance economic development. Two issues still needed to be deliberated by the full Committee, as consensus could not be reached in the sub-committee.   These were the removal of the term ‘black’ from the title of the document, and the other being that the amendments should include a sunset clause. He said that Malaysia had dealt with empowerment successfully, whereas America and Brazil had not been successful and that it would be advisable for the Committee to go on a study visit to Malaysia.

Mr W James (DA) said his concern was not in the title, but the amendment of section 1, clause 1(c)(e) on preferential procurement.  The problem with the clause was that it designated preferential procurement for black ownership and black management, whereas eligibility was based on a scorecard which included black ownership and management -- but also included training, education and skills development, and therefore the clause would override the scorecard. He recommended that it be deleted. Secondly, he said the proposal to visit Malaysia had not been discussed in the sub-committee.

Mr G McIntosh (COPE) said that the words ‘born before 1994’ should be added to 1(c)(e) after the words ‘black people’. This would be a strong signal that the country believed in the youth for the future and that the ‘born frees’ were being recognised and being allowed to live free.

Mr G Selau (ANC) said the Act was only a temporary Act to address the challenges of the day and to build a non-racist, non-sexist society in a country containing both a first world and a third world component. The bill attempted to address black economic empowerment. In the future, a new law could repeal the current law.

Mr N Gcwabaza (ANC) suggested that the word ‘black’ should not be removed from the title. It was dangerous to mislead the youth by calling on them to forget the history from which they had emerged. The transformation of society was not an event (i.e. 1994), but was needed to change the effects of 350 years of apartheid, and this was only the beginning of a long process. He said all bills had a review period and therefore this acted as a tacit sunset clause.

Mr James then proposed that the clause 1(c)(e) be replaced with ‘preferential procurement from black empowered enterprises as determined by the scorecard, including the promotion of local content.’

Mr McIntosh said he supported Mr James proposal

Mr Radebe said that Members had been canvassed via cell phone early that morning, and three Members of the sub-committee had concurred. He urgently proposed that Malaysia be visited to see how that country had successfully transformed its economy.

Mr X Mabasa (ANC) said there was much to be gained by going to Malaysia as soon as possible.
 
The Chairperson asked for a legal opinion on where the codes fitted in, with reference to legislation.

Advocate Desiree Swartz, Senior State Law Adviser, said the codes were issued by the Minister in the Government Gazette, and was therefore subordinate legislation.  This had to be taken into account.

Mr James wanted clarification on the fact that the Minister had to give permission for qualifications to be set which exceeded the standards, and that these were restricted to public entities.

Ms Nomonde Mesatywa, Chief Director: Broad-Based Black Economic Empowerment (B-BBEE), said the clause had emanated from State Owned Entities’ (SOE) submissions, as they were in the forefront of implementing B-BBEE and were setting their own targets. They wanted to set higher targets, especially on capital expenditure projects.

Mr James asked what advantage was given to companies which raised their standards, as set out in section 9(c)(6).

Ms Mesatywa said this would only be applicable to SOEs, and procurement was used as a lever to accelerate and broaden participation. These standards could not be used by all companies.

Deliberations on proposed amendments
Section 1(a): Advocate Hermann Smuts: State Law Adviser, said the definitions of a ‘B-BBEE Verification Professional’ and ‘B-BBEE Verification Professional Regulator’ would be omitted and substituted with definitions which excluded any reference to the South African National Accreditation System (SANAS).

Section 1(b): The definition of black people would read ‘persons classified as African, Coloured, Indian or Chinese under Apartheid laws.’

Section 1(c): The word ‘black’ had to be inserted after ‘broad-based’ and before ‘economic’, as it had inadvertently been excluded.

Section 1(c)(e): The last part of the clause “including the promotion of local content’ had been omitted. Advocate Smuts said this was done following input from the National Treasury.

An official of National Treasury said they were there to note proceedings and had not received an invitation to make a presentation.

Ms Mesatywa said National Treasury had made a detailed submission that it would be appropriate not to mention the promotion of local content, as that fell under the domain of the Treasury, so the Department had decided to omit that section of the Clause.

Clause Three was rejected and replaced by a new clause, on section 3, which would follow clause 2. (See New Clause on p2 of document -- Proposed Amendments dated 08/05/13).

Mr Radebe said this had arisen because of the trumping provision, which would allow the Act to trump other legislation.

The Chairperson asked if the legislation that would be affected by the Act had been identified.

Advocate Swartz said she had noted at the sub-committee that she was not comfortable with the trumping provisions and the practical effects it would have on telecommunications and mining, for example.

Mr Radebe said the legal Advisers had been given two weeks to investigate and study the matter.

Section 9(a): Advocate Smuts noted a technical amendment.

Section 9(b): Advocate Smuts noted the omission of 9(b), being a consequential amendment.

Section 13A: The insertion of the word ‘knowingly’ after the word ‘information’.

Section 13C(1): This sub-section, dealing with the appointment  of a suitably qualified Commissioner, was  removed and replaced with a new sub-section 13C(1). (See no. 2 of Clause 8 on p3 of Proposed Amendments document).

Mr Radebe said that submissions had been received that the Minister should not have too much power and that his powers should be checked, hence the appointment of a Commissioner, in consultation with the Portfolio Committee. When the Minister made the appointment, it had to be from a shortlist of three candidates, and he would have to provide the reasons for his choice of candidate. If the Portfolio Committee did not concur, then reference would be made to the other two candidates.

Section 13C(2): After the word ‘office’, the following would be added: ‘ or one additional term of office’,  reflecting that the Commissioner’s term of office could be extended once. 

Section 13E(1)(b): the word ‘lawfully’ to be inserted after the word ‘money’.

Section 13E(2): This sub-section was omitted. Mr Smuts said this removed the power of the Commissioner to be the accounting officer.

Mr Radebe said there had been the question of whether the Commission would be an independent body or a trading entity. As it would be a trading entity, the accounting officer would be the Director General of the Department.

After Section 13F(1)(a-i), a new sub-section 13F(2) would be added.  (See no.6 on p4 of Proposed Amendments document)

The Chairperson asked where appeals would be heard.

Mr Radebe said the new sub-section 13F(2) would insulate the Commission from frivolous complaints.  The final arbiter was the Director General of the Department.

Section 13G(2) and 13G(2)(a) were merged to create a new 13G(2).  Advocate Smuts said that public companies had to provide the information.

In Section 13H(2) there was the consequential omission of the words ‘or 13E(2)’.

In Section 13H(3), ‘or assignment’ had been omitted from the sub-section. This had been proposed by the legal Advisers as the subject matter was delegation, and not assignment.

Section 13J(6) would be substituted by ‘The Commission may, if it has investigated the matter and justifiable reasons exist, refer to’.  Advocate Smuts said that there should be reasons for referring matters to SARS or to regulatory authorities.

Section 13J(7) would become 13J(7)(a) and a new sub-section 13J(7)(b) would be included.  (See no.11 on p4 of Proposed Amendments document).

The Chairperson asked about the judicial review process time period..

Advocate Smuts said the judicial review process period was 180 days and they, in conjunction with the Department, felt that 60 court days would be a fair period of time.

In Section 13L(4)(a) the number of court days was increased from 15 to 60.  Advocate Smuts said that this extended the time period in which a review could be asked for, and related to confidential information.

In Section 13L(6) the number of court days was increased from 10 to 30.

In Section 13L(7) the number of court days was increased from 5 to 14.

In Section 13P(1) the Clause ‘for a period of 10 years from the date of conviction,’ was inserted after the words ‘may not’.

First Draft of the Committee’s report on the Department of Trade and Industry’s Strategic Plan
The Chairperson said that there were no recommendations in the draft and that members of the Committee should submit recommendations which would be considered at the Committee meeting on the coming Friday. She said she would develop a proposed draft conclusion for discussion at that meeting.

Other
Mr G Hill-Lewis (DA) said that he had not yet received the written responses requested from B-BBEE presenters.

The Committee Secretary said that the Department and Billiton had provided responses.

The meeting was adjourned.
 

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