BBBEE Guidelines for Sale of State-Owned Enterprises Non-Core Property; Employment Equity: briefing

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Public Enterprises

22 August 2006
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PUBLIC ENTERPRISES PORTFOLIO COMMITTEE
23 August 2006
BBBEE GUIDELINES FOR SALE OF STATE-OWNED ENTERPRISES NON-CORE PROPERTY; EMPLOYMENT EQUITY: BRIEFING

Chairperson:
Mr Y Carrim (ANC)

Documents handed out:
Empowerment: PowerPoint Presentation
DPE Property Project. Broad-Based Black Economic Empowerment Guidelines for the sale of SOE Non-Core Property: PowerPoint Presentation

SUMMARY

The Department of Public Enterprises gave a progress report on employment equity / empowerment transformation and Broad-based Black Economic Empowerment (BBBEE) guidelines for the sale of State Owned Enterprises (SOE) Non-Core Property. The Committee was concerned at the pace at which the department and state-owned enterprises were moving in meeting the targets of transformation.

MINUTES
Mr Litha Mncwabeni, the Deputy Director General introduced his delegation from the Department of Public Enterprises (DPE) as:
Ms Katherine Venter - Coordinator of the Joint Projects Facility
Ms Caroline Ritchardson - Project Manager: Property Project
Ms Reneva Fourie - Head of Parliamentary Services

B-BBEE guidelines for sale of SOE Non-Core Property
Ms Richardson said that SOEs were focusing on core business and divesting themselves of assets and enterprises that were non-core. The DPE Property Project aimed at optimising the disposal of non-core property holdings in order to promote the greatest socio-economic development impact. She outlined the process that they were following.

Cabinet had approved the B-BBEE guidelines that would guide the disposal of properties for sale and these were available on the DPE’s website (www.dpe.gov.za). Guidelines were based on the Codes of Good Practice and the Property Sector Charter. For any enterprise to bid for SOE property, they would need a BEE verification certificate from an accredited agency.

The target and thresholds were then outlined. The target was that a minimum of 70% of all asset disposals (except to government or for housing) must be to entities with a BBBEE status of at least Level 4. This means entities with scorecard points equal to and above 65%.

DPE considered that local benefit and economic development was a functional criterion against which bids should be measured. For property sales below R30 million, at least 25% of the economic interest must be held by people from the local area. Property sales above R30 million at least 25% of the economic interest must be held by people from the province. (See document for threshold statistics).

Empowerment presentation
Mr Mncwabeni’s claimed that gender empowerment was fully integrated into the activities and structure of the department. In respect of State-owned enterprises, it facilitate equity transformation through:
- Directing the strategic direction of SOEs on Transformation
- Board Appointments
- Signing of annual Shareholder Compacts
- Monitoring implementation of national policy of gender equity and BEE
- Setting of KPIs through Corporate Plans
- Quarterly and annual reporting

The Department's g
ender equity statistics indicated 62% male and 38% female. Securing women board membership still remained a challenge but more work was being done. The presentation also covered transformation and empowerment programmes by Eskom, Alexkor, Denel, Safcol, SAA and Transnet (see document for details).

Discussion
The Chairperson commended the DPE for the improved quality of presentation and reports

Mr P Hendrickse (ANC) was concerned that the figures reported on by the DPE were not adequate in assisting the Committee to understand and contextualise the report. He requested the Department look into the way they provide statistical information. He asked whether or the statistical breakdown reflected provincial or national demographics.

Mr Mncwabeni agreed that there were no consistencies in the report especially on the total number of women available at senior management level at Eskom. He added that part of the reason that statistics did not reflect uniformity was that SOEs were not given a consistent framework for reporting on demographics. The DPE would look into the matter to ensure that future reports provided clarity. The statistics reflected national demographics.

The Chairperson commented that it was imperative that Parliament engaged with statistics reflecting the country’s population in order to assess if SOEs are adhering to the country’s targets. Parliamentarians as well as government departments needed to ensure that the focus was not only on appointing and empowering African people. It had to appoint people who would take into consideration the values and aspirations of development. He was concerned that the focus was only on placing previously disadvantaged people in critical positions without taking into consideration that they also need to be skilled at "developing" people and promoting empowerment programmes. The Chairperson resolved that the issue was complex and needed a political debate at a later stage.

Adv Z Madasa (ANC) commented that, in general, transformation of SOEs had happened quickly at top management level while middle management remained non-transformed. It was sad that people in top management positions did not really care about what values people brought into the work environment. Generally transformation was happening at a slow pace considering that after ten years of democracy, not much had been achieved. He referred to cases of fronting, making an example of DENEL. He attributed much of the failure to the procurement processes.

Adv Madasa asked why the value of the property increased, while compliance continued to decrease. The rich were being let off from complying and that was contrary to the country’s programme.

Mr Mncwabeni agreed with the sentiments of Adv Madasa. He confirmed that the DPE was engaged in a process of deliberating on transformation of the SOEs. The SOEs were expected to focus on their core business while at the same time adhering to transformational issues.

Mr Likotsi (PAC) requested the DPE to provide a clearer breakdown on Eskom's figures for women as well as people living with disabilities.

This question was not answered and the Chairperson adjourned the meeting as the Committee had to attend another meeting. He asked the Committee researcher and secretary to compile remaining concerns and comments for discussion with the DPE at their next meeting. He said that they would ensure that adequate time would be allocated at that meeting to ensure that all issues were addressed.

 

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