BEE association hauled before Competition Commission

Published in SEDA Business Brief December 2007

A JOHANNESBURG-based Black Economic Empowerment (BEE) consultancy has laid a complaint with the Competition Commission against the Association of Black Economic Empowerment Verification Agencies (Abva).

Keith Levenstein (pictured here) who runs BEE consultancy EconoBEE alleges that Abva is threatening to bar non-member consultancies from issuing BEE ratings to business owners by insisting their corporate clients only accept certificates from suppliers who are rated by Abva members.

“They’re saying that nobody, other than my friends, can do ratings,” says Levenstein, who first took his complaint to the commission last month.

Big companies assess how much they have procured from black businesses by asking for each of their suppliers in turn for a BEE rating.

But Levenstein says Abva have instructed corporates not to accept ratings that are not performed by Abva-accredited rating agencies.

He says this is sidelining rating agencies not aligned with Abva, but says most importantly it is costing small companies huge amounts as Abva is effectively disallowing ratings carried out by businesses themselves.

EconoBEE stands to lose out as the consultancy sells software to small business owners looking to carry out their own self-rating.

This despite the fact that the Department of Trade and Industry (DTI) has allowed businesses to carry out self-ratings ahead of any official accreditation of rating agencies.

Levenstein says a recent DTI survey shows that over 30% of companies have produced a scorecard using the self-assessment method. He said his submission to the commission follows a statement recently-released by Abva, which reads:

“Abva requires that when their members are considering certificates for calculation of procurement points in a verification, only certificates from Verification Agencies that have submitted to Sanas for accreditation will be considered valid.

“In order to validate if a Verification Agency has submitted to Sanas one would need to consult with the full member listing on the Abva website or request from the verification agency directly their proof of submission letter from Sanas.”

He says the statement goes against any DTI or government policy as the DTI has yet to release additional guidelines on rating agencies.

In his submission to the commission Levenstein noted that Abva themselves recognised that it was not a pre-requisite to use an accredited rating agency.  Levenstein says the only organization who may issue policy on the verification process is the DTI, in terms of paragraph 10.1 of code 000, statement 000.

He noted too that recently a business owner in Cape Town wrote to the Democratic Alliance (DA) requesting that the party look into the matter of self-ratings. Though the question was raised in Parliament by the DA, he says the DTI has yet to provide a clear answer on the matter.

He says he’s not necessarily looking for a court outcome, but said if the DTI put out a document assuring businesses they could go ahead with self-ratings, that he would be satisfied enough.

The next step is for the commission to determine whether to go ahead with a detailed investigation or not.

Theo Lombard, Abva chairperson declined to comment.

Contact EconoBEE on 0861 11 3094.

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