Drug multinationals deny evading BEE law
The multinational pharmaceutical industry has denied claims that companies would sometimes use imports as an excuse not to comply with black economic empowerment (BEE) legislation.
This was in reaction to observations by Keith Levenstein, the chief executive of consultancy firm EconoBEE, who on Friday said these companies believed that since they imported most of their goods, their BEE scorecards would be negatively affected. They then chose not to implement the empowerment principles at all.
Levenstein said what these companies did not realise was that there were provisions made for companies that imported and that BEE was more than just about procurement.
“Many companies say we can’t become compliant because we import. Just because you are purchasing overseas, it does not mean you must not produce a scorecard and imports will not be used to hurt you,” he said.
“Other things can be asked, like who is your landlord, what information technology companies and travel agents do you use? These may all have scorecards,” said Levenstein. “Most imports can be excluded from the calculation.”
Procurement is one of seven elements that make up the BEE scorecard and it carries 20 percent of the points. The other elements are ownership, socioeconomic development, enterprise development, skills development employment equity and management.
Levenstein said a lot of companies were ignorant about how the BEE scorecards worked. “They are probably more confused and that is why they don’t try,” he said.
Other industries that were reluctant to draw up empowerment scorecards were those in the branded goods sector and those that had a monopoly.
However, Brigitte Brun, the chief operating officer at Aqrate Verification Services, said while the firm was aware that people looked for a reason not to comply with BEE, this had not been observed with the multinational pharmaceutical companies.
Brun said Aqrate had clients among international pharmaceutical firms, which produced BEE scorecards.
“At the end of the day, people will do BEE because there is pressure from clients or because they believe it’s good for their business and the country. But I can’t think of a single company that does not have competition or will not have competition in the future,” said Brun.
Glen Sullivan, the chief executive at Novartis South Africa, said the company supported the process of BEE and its objectives to increase meaningful participation for the majority of South Africans in the country’s economy.
He said the company produced a BEE scorecard, which was issued by an independent verifying agency.
“A clear understanding of BEE as a concept and the rationale behind each pillar of the scorecard is necessary. Companies that take the process seriously take it upon themselves to understand the scorecard and its objectives, either through self learning or engaging appropriate services for this purpose,” said Sullivan.