Original publish date – Thu, 23 Aug 2012 09:02:05 +0000, Keith

Disclaimer: we don’t like this method of earning points, but it is used by at least one verification agency who tells us this method is condoned by SANAS. The dti, the gatekeeper of the codes pretty much refuse to investigate any alleged transgression of the codes, or take action, so we feel duty bound to inform you how to earn 8 extra points.

This scheme will only work for companies that are 100% white owned. If you are partially or totally black owned, then you are being discriminated against.

1) Sell one share in your business to a black person. It does not matter how many shares you have in issue – 100, 1000, million, 10 million. The more shares in issue the lower the value of the one single share. For this example let us assume you have one million shares in issue.

2) Make sure the black person pays for his single share. If your business is worth R500 million rand, and you have one million shares in issue, then he owes you R500.

3) Appoint the right agency to verify you.

4) This agency will award you very few points for voting rights and economic interest. This is because you would only have 1 millionth of your business in black hands. However this agency will award you full points for the indicator Net Value,ie 7 points, and an extra 1 point for ownership fulfillment, ie 8 points because that single share has been fully paid for.

5) How it works: The indicator “net value” awards points based on a percentage of the debt still owing on the shares. It is a complex calculation that takes into account the length of time that the debt, ie the amount owing on the shares, has been outstanding. It also is supposed to take into account the percentage of shares that are in black hands. The  target for economic interest is 25%, and the codes clearly state that the maximum points to be earned may not exceed the ratio of shares owned/25%. If 25% of shares are in black hands then the ratio is 100% of the 7 available points. If only 2.5% of shares are in black hands, then this is 10% of the target, and the maximum points to be earned cannot be more than 10% of 7 points i e 0.7. This agency, that is fully accredited by SANAS, and who states that SANAS has audited their management system choose to ignore this maximum calculation. They state that the maximum points calculation can be dispensed with, and if 100% of the shares owned by black people have been paid for – even if only one share out of one million – then the ratio is 100% of the 7 available points. They will then award 7 points.

6) They go further: Another indicator is “Ownership Fulfillment”, which is worth 1 point. This point is awarded only if Net Value has earned the full 7 points and the shares are fully paid for. In this instance, since the agency has awarded 7 points and the shares, actually one share, has been fully paid for, another points for Ownership Fulfillment will be awarded.

8 points for selling one share worth R500! This is almost one B-BBEE level.

The above is not a purely academic argument. This agency has awarded our client 8 extra points. Our client, and ourselves are extremely upset that the methodology has not been conducted in accordance with the codes, but the agency sticks to its policies and refuses to change policy and re-calculate the scorecard and re-issue a certificate. Our client wants as many points as possible, but not where they know the agency has made a mistake. Until the agency corrects this they do not want to issue their certificate.

We would hope that the dti and SANAS will take action against this errant agency. Of course, if SANAS and the dti do not react, then it will imply that the agency is indeed correct, and this is a fantastic loophole in the codes to enable any (white owned) businesses to earn a further 8 points.