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Submission for Amended QSE Codes – EconoBEE Newsletter – 26 November 2014

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Submission for Notice 876 of 10 October 2014

By: Keith Levenstein, CEO, EconoBEE.

EconoBEE has always issued submissions when requested. We have spent many months writing submissions, applying our mind to ensure that transformation is supported, encouraged and implemented to the benefit of our diverse population. We have always supported the Act, the strategy and the codes. Our criticisms have only been where they were not applied correctly. It is our belief that the biggest threat to transformation is companies electing not to prepare a scorecard – as opposed to preparing a scorecard but being non-compliant.

The BEE Ombudsman and Fronting
We were at the forefront of recommending a BEE Ombudsman – now the Commissioner. We were at the forefront of identifying fronting, now criminalised in the Amendment Act. We pointed out errors in the codes, the act – many of which found their way into revised codes or gazettes.

Errors becoming Insurmountable Problems
Recently we pointed out the error by the minister in not giving 60 days commentary period on these codes as required by the act. After getting no response from the dti we had to approach members of parliament before the minister agreed to follow the act and extend this deadline.

We often saw the unintended consequences of any gazette or codes, because while they were unintended, they were perfectly foreseeable by people such as us who are “on-the-ground”. Because we are independent to verification agencies, and auditors, even to other consultants we were able to make comments that agencies and auditors were too scared to make, lest they lose their accreditation.

We were able to legitimise the industry to a large extent. Whenever we came across an issue, we analysed it, consulted widely and applied our minds from all viewpoints to reach a conclusion. We approached entities who had issued invalid certificates and convinced them they had made a mistake. We approached verification agencies and auditors, helped them to issue correct certificates. We have been responsible for changing many BEE certificates that wereinvalid or incorrect.

Over 95% of these issues were solved by the auditors, agencies or measured entity thanking us for our time and trouble in legitimising their certificate. Where we are able not solve the issue, many of our own clients were prepared to take action against a supplier who issued an invalid certificate. In some cases, the supplier was suspended or the contract cancelled.
Only where all else failed – ie 2-3% of all offenders we came across, did we report this to the dti, the sector councils, the regulators, SANAS and later IRBA. We have been spectacularly successful in legitimising the industry by talking directly to the companies themselves and to the verification industry.

The DTI, Sector Councils, SANAS and IRBA
We have been unsuccessful in getting any support from the dti, most of the sector councils, SANAS and IRBA. In most cases we do not even get the courtesy of an acknowledgement. If we do get an acknowledgement, there is never a followup response. They are happy to use our ideas and submissions, but fail to respond when we have queries that are always in the public interest.

The tourism sector council is a case in point. We have twice visited the department to try to assist with their own serious problems. We have reported hundreds of issues to them, many related to mistakes on EME certificates. We get no response! It has reached the stage that we feel we cannot solve this on our own. The R2.5m threshold is completely ignored, and the number of errors overwhelms us, particularly since the tourism sector council would rather not take action.

The same situation exists with SANAS and IRBA. We have tried to report issues to them, and but for the odd response acknowledging our comments neither regulator bothers to take remedial action, or does as little as they can get away with.

IRBA in particular has proved to be a huge disappointment. We were very supportive of auditors performing verification. Many auditors perform their task with diligence and competence. Many approach us for advice, attend our courses and keep in close contact just to ensure that they have the latest information and correct interpretations. As in any industry, there are the “bad apples”. These, as a last resort, we try to report to IRBA who use every delaying tactic available to ignore us, following bureaucratic principles to confuse the issues and not take action. We have reached the stage with IRBA that we are following the process to lay charges against IRBA and their senior officers in terms of 13 O (2) of the BEE Amendment Act! IRBA shows no interest or competence in BEE issues. They do not believe that it is their job to investigate any specifics of BEE verification. They seem to have no care about BEE and true transformation. There is apparently a big argument between the dti and IRBA based around budgets. IRBA’s view is if they have no budget, they do almost nothing.

When we do manage to pin them down they give ridiculous comments: On a complaint from us that an auditor had used the “section 12” Media Advertising and Communications charter instead of a 9(1) code, the Director: Legal Department stated: “In our view, there is no pre requisite to apply a section 9(1) gazetted Code and there is no prohibition from applying the MAC scorecard as was apparently done in this instance.” She is saying that IRBA are prepared to accept a valid 9(1) certificate using any arbitrary code, even if it has not been gazetted as a 9(1). Amazingly and extremely unusually we managed to get a response from the dti on this, obviously agreeing with us that the Director: Legal Department was incorrect. We forwarded the dti’s response to IRBA, predictably with no response and no action taken against the auditor.

Conclusion Comments on QSE Codes
What IRBA is saying is they are totally happy with any old certificate, even if it has not been issued in line with 9(1). There is therefore no reason for us to issue comments on the draft QSE codes. As far as IRBA is concerned, if we don’t agree with a particular issue on these Amended QSE Codes, we can ask an IRBA auditor to continue verifying based on the existing QSE codes or any other codes we feel like creating.

The dti is aware that both the dti and EconoBEE attended and gave presentations to the Gauteng Government on the Amended QSE codes. We prepared a detailed PowerPoint presentation giving positive comments about the draft codes. We also pointed out specific errors that we know would be useful to the minister in drawing up final QSE (and other codes). However the experience we have had with IRBA specifically, but also the dti, SANAS and the tourism sector council in the past months have convinced us that there is no reason to continue supporting those organisations by assisting in drawing up the codes or comments.

However we remain committed to transforming the economy.

We see no reason to issue further formal comments on the revised QSE codes. IRBA does not care, and by implication neither does the minister, dti or SANAS. We see a better chance of improving transformation by waiting for the minister, the dti, the regulators and sector councils to make their usual mistakes so we can publicly name and shame them into doing it right.

We have always tried to use shaming as a last resort.

As a result of our concerns related to the points mentioned above we are declaring a peaceful protest against IRBA, the dti and SANAS by not submitting a comment on the Amended Codes issued on 10th October 2014. We feel our voice will be better heard when we criticise these organisations publicly after they have made their own mistakes.

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EconoBEE Newsletter
 26 November 2014

In this issue

  • Submission for Notice 876 of 10 October 2014

In other news

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