News on the BEE Front – EconoBEE Newsletter – 8 February 2011

EconoBEE - BEE Points = Business

February for many is the last chance to improve on their BEE Scorecard. The BEE Scorecard is always based on retrospective data often using the financial year end. This ultimately results in any transactions/spend on the BEE scorecard that occur in February being included and any transactions/spend in March being excluded. This can have a major impact on the BEE scorecard.

If you don’t have a scorecard, now is the time to get one. EconoBEE Scorecard will help you calculate a BEE Scorecard before it is too late.

News on the BEE Front

BEE fronting is still rife, however the more news coverage fronting receives the more risky it becomes. A recent story involving a business who had a 51% black shareholding has arisen where the sharehoder had no knowledge of the transaction.

The Times Live said “Elliot Dhlamini, 43, said he did not know he was a majority shareholder of the Pretoria-based company, Plasmeg. He was paid R7000 a month as a truck driver delivering goods across southern Africa. He said he worked for the company for 17 years.
Plasmeg’s two other directors Daryn Pretorius, 31, and Willie Olivier, 62, own 24% and 25% of the company respectively.

When The Times contacted Pretorius yesterday he initially said that he and Olivier were the only directors, but when we put it to him that the company had BEE status, he said: “. Elliot [Dhlamini], myself and Willie own Plasmeg. Ja, we’re 51% black-owned”.

Pretorius said that Plasmeg’s accreditation with the South African Mining Preferential Procurement Forum “definitely helped” the company to secure municipal contracts.

According to the same article Plasmeg secured a SAMPPF accreditation in 2005 and registered on the Mpumalanga’s Thembisile municipality vendor database in 2007.

Analysis of this deal
In 2005 and even now, many government departments are encouraging this type of behavior. This form of fronting is clearly contrary to the Broad Based BEE Codes of Good Practice. However it is exactly in line with the current government procurement legislation – PPPFA. Sadly in terms of the PPPFA it is unlikely that it is fronting because the PPPFA only asks for Ownership. It does not ask for voting rights or economic rights and certainly doesn’t care if the shares are paid for. According to Cipro Plasmeg was registered in 2001 and then changed from a CC to a PTY LTD in 2005 when the BEE transaction occured. At the time of the BEE transaction the BEE Codes of Good Practice were still in draft format. Similarly at the time of the registration with
Mpumalanga’s Thembisile municipality vendor database the BBBEE Codes had only just been gazetted and the government procurement policies were still in full force.

What went wrong?
Plasmeg did a deal with the intention of capatalising on the flawed government procurement policies. The shareholder had no idea what he was doing and as is so often the case didn’t really care while he was earning a salary.

Is this fronting?
Yes, but not BBBEE Fronting. BBBEE Fronting is a deliberate misrepresentation of a companies BEE status. In this case they did not misrepresent their BEE status because if they had been through a BEE rating they would have earned no points.

Who is to blame?
If the government procurement policies did not have these flaws this would not have happened. Treasury has issued a new draft but have been very slow at introducing it.

The Solution!
Follow the true Broad Based BEE Scorecard. The elements on the scorecard are designed to limit fronting by providing a series of preventative measures. The list of fronting indicators can be found on our website.


Is your year end near?

Your BEE scorecard is based on your financial information which means you can still earn points. If you wait you might not earn the BEE points you need. Contact us and we will help manage your BEE Scorecard for you.

EconoBEE is a BEE Consultancy. We created the 10 Steps to BEE to help businesses follow a simple yet highly effective approach to become BEE Compliant. Our Complete Managed Service will help you, through a high level in-depth consulting process, achieve your BEE Goals. We will become your “out sourced” BEE Department capable of assisting you in all areas of the BEE Scorecard. Our software tools have been expertly designed to ensure quick service delivery and accuracy every time.

JSE Launches BEE Index

The Johannesburg Stock Exchange has now introduced an index specifically for black South Africans to purchase shares of listed companies. The Sasol Inzalo BEE Scheme will become the first company to list their shares on the index. The index is intended to allow the easy trading of the shares. This will create instant value for the shareholders by allowing them to trade the shares and provide an easy access point for listed companies to find black shareholding.

Do note, that this will not be a complete solution because the intricate details of the BEE Codes still encourage black female ownership and ownership of various schemes including the most common – an employee ownership scheme. The index will be a great tool for black South Africans to participate in an ownership deal.

The newly launched index will allow companies to list a portion of their shares on the JSE and be assured that any investors buying those shares are black people. We anticipate seeing greater investment by black people on the JSE which will enhance the Broad Based BEE policies.

This will hopefully create further awareness and enhance Broad Based Black Economic Empowerment.

BEE Seminar Aims to help business become BEE Compliant

Introducing “How to Become BEE Compliant” for March 2011.

EconoBEE is proud to present a full day seminar on how to practically earn BEE points. During the session we will explain;

  • How to become BEE Compliant
  • What it means to be BEE compliant
  • Gaining business from your BEE scorecard
  • Earning BEE points without Ownership
  • Optimising your spend on the BEE Scorecard
  • Earning points from existing business activities
  • Speed up BEE Verification and cut down on costs
  • and offer a 20% discount on EconoBEE V3 BEE Scorecard Software

Our full day seminar educates companies on all aspects of BEE. The Practical Implementation of BEE seminar is held in Johannesburg – March 2011.

For more information on our full day course please call EconoBEE on 011 483 1190.
Bookings please complete the online form or download the booking form.
Pricing – R3249 incl VAT.

Prepare a strategy for 2011. Measure, update and focus on BEE throughout the year. Create your strategy now and ensure the score your customers require is the scorecard you achieve. Our managed service will help you achieve your long term goals. Contact us.

Exempt Micro Enterprises (EMEs), turnover below R5 million per annum – exempt from BEE more info…

How to be “verification Ready” and earn more points?
Not sure how to get a BEE Scorecard, click here to see a demonstration of how best to produce your own BEE scorecard.

While there is demand for a B-BBEE Scorecard someone will be taking advantage, shouldn’t that someone be you…

Want us to manage your BEE Process – simple 10 steps to BEE Compliance.

Use our pre-prepared “Verification Ready” documents and templates in your business – contact us for more.

Turnover below R5 million – find out how to get your BEE Exemption.

Is BEE procurement a pain? Sort it out quick and easy – click here.

EconoBEE Newsletter
08 February 2011

In this issue

  • News on the BEE Front
  • JSE Launches BEE Index
  • BEE Seminar Aims to help business become BEE Compliant

In other news

About EconoBEE

EconoBEE is an expert BEE consultancy. EconoBEE helps businesses Become BEE Compliant, prepare for verification, earn maximum BEE Points and ensure that they achieve the BEE Level they need to get more business.

Our services include BEE Management Systems, Training, EME Pack, Complete Managed Services; consulting and advisory and Procurement Solutions.

As leaders in the industry we are driven to help maintain and develop knowledge in the BEE industry.

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Gavin and the EconoBEE Team

Executive summary of B-BBEE

Turnover below R5 million per annum – automatic BEE status

Turnover above R5 million per annum – you need a BEE Scorecard. Our workshops, scorecard tools, procurement manager or a complete managed services will be best for you.

Complete Managed BEE Service


Short term, medium term, long term – EconoBEE has just the service to help you earn the points you need.

10 Strategic Steps to B-BBEE!

We have prepared an easy to follow guide “B-BBEE in 5 Minutes” and “Crash Course to BEE Verification” which explains BEE in a simple step by step approach.

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