A lot of what the charters had set out to achieve could not be measured with a good degree of confidence. For example the famous 26% black ownership target that came with the original Mining Charter could not be authenticated. That is how the late Brett Kebble and many others like him came to capture BEE equity deals.
By: Sibonelo Radebe
If there was to be a list of people who must be persecuted for the mess that has become the Mining Charter it must include, very high up, those who run the department of trade and industry (DTI).
To be sure, Mosebenzi Zwane and his handlers must top this list. But it needs to be said that the minister of trade and industry, Rob Davies, and his director general, Lionel October, have failed their duties of administering broad based black economic empowerment (BBBEE) where the mining industry is concerned. They have the trump card but they will not use it. Their failure by omission smacks of pandering to narrow intra-party politics at the expense of the empowerment project.
Those who know that the Mining Charter is anchored by a free standing legislation, independent of the BBBEE Act, are by now thinking: I must be smoking something?
There-in lies the nub of the matter. The maintenance of the flimsy transformation document called the Mining Charter is the source of all this mess. And the DTI was long mandated to mop it out. It failed.
That mandate came from the latest version of the BBBEE Act which came with the trumping clause. Seeing that the economic transformation regulatory space was bedevilled by a cacophony of different and sometimes contradictory guidelines, legislators thought it wise to clean the space.
They ordered all sector focused charters to substantially align themselves to the BBBEE Act and the attendant codes of good practice. The order was empowered by the insertion of the trumping clause in the Act.
The clause was designed to safeguard the spirit of the BBBEE Act against dodgy sector focused transformation charters. It states that where a sector focused charter conflicts with the codes, or fails to substantially align, the codes must prevail.
A trail blazer
A step back into history will be useful. The Mining Charter was once perceived as a brave driver of economic transformation. Enacted in 2002, as part of the Mineral and Petroleum Resources Development Act (MPRDA), it became the first transformation guideline. It actually spooked the markets in a big way. Radicals cheered.
As such the Mining Charter carved the path that saw the making of the financial sector charter and a couple of other sector focused transformation guidelines. Key sectors like construction, property and ICT followed suit.
Most of these charters turned out to be blunt. That is partly because industry bosses were able to dribble past their black employees who were meant to be negotiating on behalf of black communities. A flip side view will say sector focused charters became a play-ground for a handful of black professionals to do personal enrichment deals at the expense of the broader transformation mission.
And the many transformation charter councils became inward looking political islands. They created nicely titled jobs (CEOs) and directorships. They became Volkstats of sort. The Mining Charter Volkstats was the strongest as it was anchored by the MPRDA. And yet the Mining Charter turned out to be the weakest of them all (2017 June draft included).
Parallel to the making of the sector focused charters, another process was unfolding. The BEE Commission of old, under the direction of Cyril Ramaphosa, had tabled its findings in 2001 with a proposition to establish the BBBEE Act. The Act was enacted in 2004 and called for the creation of the BBBEE codes of good of practice. The codes came into being in 2007 and were designed to become the supreme guidelines of economic transformation.
The BBBEE codes are far from perfect but they came with lots of sense and muscle compared to the charters. It had become clear that the preceding charters were never going to work because they were largely manifestos, a collection of unenforceable slogans if you like.
A lot of what the charters had set out to achieve could not be measured with a good degree of confidence. For example the famous 26% black ownership target that came with the original Mining Charter could not be authenticated when someone says I have 26% black ownership. That is how the late Brett Kebble and many others like him came to capture BEE equity deals.
The solution was a pack of comprehensive codes of good practice designed to ensure that claims to black economic empowerment can be authenticated and they should be comprehensive too. The comprehensive factor is important too. The BBBEE Act admirably demands that empowerment programmes must be comprehensively meaningful. A deal that only transfers ownership to black shareholders, let’s say to the Guptas and Duduzane Zuma, and yield nothing else for other stakeholders; workers and affected communities, should not pass the BBBEE test.
The codes also came to introduce fairness, predictability, certainty and consistency into economic transformation. BBBEE would be systematised as opposed to being a thing that appeals to whims of politicians.
But then the plan to turn the BBBEE codes of good practice into a supreme economic transformation guideline did not succeed after introduction in 2007. That was largely because industries chose to stick to their weak sector focused charters. The Folksat mentality served to reinforce this.
And so, the codes had to be given the trump clause in 2015. And then sector focused charters were afforded a chance to adapt themselves to the spirit of the codes failing which they would be killed. The chance to adapt or die was styled as a 12 months transition period which is long gone. The Mining Charter, the June 2017 draft included, is far from being a decent code.
The BBBEE Act empowers Davis and October to trigger the trumping provision for charters that have failed to align themselves to the BBBEE Act. But they won’t act.
Sibonelo Radebe is a business and economy editor of The Conversation Africa. He writes in personal capacity.