Extract from speech delivered by DA Shadow Minister of Trade and Industry, Wilmot James MP, during today's debate on the Broad-Based Black Economic Empowerment Amendment Bill in Parliament.

DA supports B-BBEE bill

The DA supports the Broad Based Broad-Based Black Economic Empowerment (BBBEE) Amendment Bill. The Bill has the potential to promote redress, decrease inequality, and promote economic growth and job creation. This is in line with the DA's belief that Reconciliation, Redress, Diversity, and Delivery are the most appropriate measures to redress the injustices of apartheid.

The Bill before us amends the Broad-Based Black Economic Empowerment Act of 2003 in the main to:

• promote compliance i.e. criminalise what has become known as ‘fronting';
• set down incentive schemes to support BBBEE compliant enterprises; and
• establish a Commission to scrutinise and monitor compliance.

During the committee stage the DA put a number of proposals that were duly accepted and carried by the Portfolio Committee on Trade and Industry:

• that the Commission have the resources to be fully capable of dealing with queries;
• that the Commission only investigate cases if there is demonstrable cause;
• that companies listed on the JSE be required only to provide compliance information and not be burdened by having to provide irrelevant data; and
• that the appointment of the head of the Commission is the joint responsibility of the DTI Minister and Parliament.

However, we will be seeking last minute changes to ensure that due process and fair procedure is adhered to when it comes to the cancellation of contracts. Section 13(a) of the Bill as it stands, will have the unintended effect of retarding the progress of BBBEE, not advancing it.

The clause allows State Owned Enterprises (SOEs) to cancel contracts that have been entered into on the basis of false verification data. This appears to be quite normal. However, the effect is that banks will be less likely to finance BEE transactions if there is a possibility that contracts will be canceled arbitrarily. The issue was raised as a serious one by the Banking Association of South Africa and the Oceana Group. If passed in this form it will set BEE back.

The further challenge with the Bill is to ensure that the scorecard drives genuine broad-based empowerment and prevents re-empowerment of the already enriched; and includes self-defined employment equity target compliance. It is imperative that the Bill is non-racial when it comes to enterprise development, education, training and corporate social investment grants.

The scores generated by the application of the scorecard become the basis of BBBEE compliance and not simply the historical identity of the owner. What matters in the scheme of things is whether empowerment is spread far and wide in the company, the sector and the economy as a whole. Too often the well-connected elite have enriched themselves in the name of Black Economic Empowerment.

In the DA's Plan for Growth and Jobs we make the following additional proposals:

• To reduce the cost associated with complying with empowerment regulations for Qualifying Small Enterprises by introducing biennial BBBEE audits valid for 24 months;
• Introduce an employee bonus scheme for unlisted firms that replicates existing share incentives as we have them for listed entities;
• Declare 50% of the value of shares awarded to qualifying employees to be tax deductible to the employer, and exempt the full value and any eventual gain from income tax in the hands of the beneficiary;
• Introduce an employee bonus scheme for unlisted firms that replicates existing share incentive regime for listed entities; and
• Distribute shares in the country's State Owned Enterprises (SOEs) in order to activate ‘dead capital' and thereby put financial assets in the hands of poor South Africans.

We live in a country with a history of cumulative race-based exclusion that someone once described as encompassing the long centuries of injustice. In the 20th century the 1913 Natives' Land Act, the 1946 Asian Land Tenure Act and the 1950 Group Areas Act were the principal instruments of stripping assets from the voteless majority. Supporting the Amendment Bill is a contribution to righting a historical wrong.

Issued by the DA, June 20 2013

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