Original publish date – Thu, 02 Apr 2009 12:17:38 +0000, Keith
So, the Financial Services BEE charter has now collapsed. This is one case where I can say “I told you so”. For years I have been promoting BEE, but stating that the charters are a total waste of time – the only people who benefited were the lawyers and consultants. I have previously disclosed that I was asked to comment on the legal charter for the department of justice and constitutional development and earned a couple of thousand rands before they listened to me and decided to abandon it as a sector code.
In the case of the financial charter, many banking people criticised me when I stated that the FSC was not following the law, was using incorrect definitions etc. They promised that it would be brought in line with the codes. It did not.
What is more interesting is that the financial sector still seem to have absolutely no understanding on BEE or what a charter, and sector code is all about. The news report is that the banks and government could not reach consensus on the ownership issue. Apparently the banks wanted the ownership target to be 10% and the dti 15%.
I wonder if the banks actually understand what the BEE codes really say and mean? The truth is that they have always had to produce a BEE scorecard. They HAD to use the codes of good practice unless the FSC had become a sector code. In the event Nedbank has actually produced a BEE scorecard based no the codes, while ABSA and Standard Bank have a ridiculous looking FSC scorecard showing that they are level 2s. Seriously, this is not April 1st!
The sad thing is that many verification agencies have chosen to ACCEPT those FSC scorecards even though they carried no legal weight. From now on, all banks – the entire financial sector – must use the Codes of Good Practice scorecard. They have never had any discretion previously and certainly do not have any longer. I personally am going to make sure that the NCR and other financial regulators follow government law and demand a scorecard from the banks.
Now what do those codes say about ownership:
Target = 25% plus one vote.
What did dti want: 15%.
What did the banks offer: 10%.
What are they now going to have to follow: 25% plus one vote!!!!!!
Is the financial sector mad not to have gone along with the dti’s request for 15% ownership? Don’t they see their stupidity?