Original publish date – Tue, 05 Oct 2010 07:44:46 +0000, Keith
The PIC has now stated that they are unhappy with the ArcelorMittal deal. They specifically ask why the BEE deal was not broad-based. See http://www.businessday.co.za/articles/Content.aspx?id=122763.
We were the first BEE Consultancy to express reservations about the deal, by calculating the number of points that AM would earn via the deal. Our concern then, and now is AM chose to call this a broad-based deal when it hardly earned 5 points on the scorecard. They had various clauses in their deal that were unenforceable, showing really poor knowledge of B-BBEE and the codes. At one point they have stated that after the deal is completed they will call in a verification agency to evaluate their BEE score. Our view has always been that you evaluate your score BEFORE doing the deal, and getting a verification agency only to verify the points earned. You never call in a verification agency to help you see how many points you have earned, AFTER the deal. It is obvious that the deal was never intended to be broad-based.
At the same time we have noticed that some government departments are using the B-BBEE level as a criterion for awarding grants. We have recently asked the Public Protector to investigate why government departments, organs of state and public enterprises invariably do not use B-BBEE as a criteria in doing business. There now seems to be a distinct trend to slowly using B-BBEE principles, which we sincerely welcome.
We believe that this new approach to empowerment is going to remove a lot of the negativity around BEE, and ensure that the right people benefit, in the right way.