US embassy cable - 04PRETORIA3831

UNCLAS SECTION 01 OF 02 PRETORIA 003831 
 
SIPDIS 
 
DEPT FOR AF/EPS DKRZYWDA AND AF/S/TCRAIG 
COMMERCE FOR 4510/ITA/IEP/ANESA/OA/JDIEMOND 
TREASURY FOR GCHRISTOPULOS, LSTURM, AND AJEWEL 
DEPT PASS USTR FOR PCOLEMAN, WJACKSON AND CHAMILTON 
 
SENSITIVE BUT UNCLASSIFIED 
 
E.O. 12958: N/A 
TAGS: EINV, ETRD, EFIN, ECIN, ECON, SF 
SUBJECT:  ANSWERS TO KEY EMPOWERMENT QUESTIONS 
 
(U) This cable is sensitive but unclassified.  Not for 
Internet distribution. 
 
1.  (SBU) SUMMARY. Several industry charters are non- 
compliant with Black Economic Empowerment guidelines, 
according to Teddy Daka, one of the original drafters of the 
Broad-Based Black Economic Empowerment (BEE) Bill.  He also 
explained that sector charters would be issued as Codes of 
Good Practice, once approved by the Department of Trade and 
Industry (DTI), and that scorecards are just one way of 
measuring compliance with BEE targets.  Daka said that a 
list of names for the National BEE Advisory Council is 
before President Mbeki and should be approved soon.  END 
SUMMARY. 
 
2.  (U) Teddy Daka, one of the original drafters of the 
Broad-Based Black Economic Empowerment (BEE) Bill and a 
consultant to the DTI on the creation of 
the National BEE Advisory Council, met with several U.S. 
multinational firms on August 23 at the American Chamber of 
Commerce (AmCham). 
 
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ARE SOME SECTOR CHARTERS NON-COMPLIANT? 
--------------------------------------- 
 
3.  (SBU) Daka explained that a number of the existing BEE 
charters were drafted before the Broad Based BEE 
Bill became law and do not take into consideration its 
guidance for creating a document that truly transforms a 
sector through empowerment.  Consequently, some of the early 
charters, such as Liquid Fuels, Mining and to a lesser 
extent Financial Services, will need to be redrafted.  For 
instance, Daka pointed out that the Liquid Fuels charter 
does not even contain a scorecard, while in the Mining 
Charter, many of the scorecard criteria do not have targets 
but are simply yes or no questions such as, "Do you have a 
human resources development program in place?"  According to 
Daka, this type of ambiguity in a charter perpetuates an 
environment where a concerted, specific industry target is 
difficult to achieve.  Consequently, the Liquid Fuels 
charter will need a scorecard and the Mining Charter 
scorecard will need to be adjusted to include targets for 
all seven empowerment criteria. 
 
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WHAT ARE THE CODES OF GOOD PRACTICE? 
------------------------------------ 
 
4.  (SBU) Daka said that the private sector charters would 
become Codes of Good Practice for their respective 
industries.  Once drafted and signed by industry 
stakeholders, a charter is submitted to its host government 
department for approval (e.g., Mining Charter submitted to 
Department of Minerals & Energy, ICT Charter submitted to 
Department of Communications) and then on to the DTI for 
approval and publication in the government gazette as a Code 
of Good Practice for that industry.  If either the host 
department or the DTI do not feel the charter meets the 
goals set out in the BEE Act, then they can send it back to 
industry for additional work. 
 
5.  (SBU) In addition to the charters, the DTI has nearly 
completed Codes of Good Practice governing the accreditation 
process for companies who will rate and accredit other 
businesses.  Rating and accrediting companies will measure 
the performance of a firm against the BEE targets of its 
respective scorecard.  DTI Chief Director for Black Economic 
Empowerment Philisiwe Buthelezi said that these Codes have 
been completed and are awaiting approval from the minister 
and the cabinet before they are published. 
 
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WHAT IS A BALANCED SCORECARD? 
----------------------------- 
 
6.  (SBU) According to Daka, there is no official government 
policy on the balanced scorecard.  He said the scorecard in 
the DTI's Strategy for Black Economic Empowerment document 
is a suggestion on how a balanced scorecard might look. 
Daka explained that the term "balanced scorecard" is simply 
a scorecard that measures performance in seven empowerment 
areas and is not by definition a scorecard that allows 
overscoring in one area to compensate for underscoring in 
another.  Daka also said that a scorecard is not required, 
but is a suggested tool for measuring a company's 
performance against black economic empowerment targets.  He 
explained that if industries can devise other ways to 
measure compliance with BEE targets that they are free to 
use them in place of a scorecard. 
 
--------------------------------------------- - 
WILL THERE BE A NATIONAL BEE ADVISORY COUNCIL? 
--------------------------------------------- - 
 
7.  (SBU) The National BEE Advisory Council will advise 
government as well as the private sector on black economic 
empowerment.  According to Daka, a DTI Task Team submitted a 
list of names for the Advisory Council to DTI Minister 
Mpahlwa nearly three months ago.  The list is now before 
President Mbeki, who chairs the Advisory Council.  Daka said 
that Mbeki reportedly was unhappy with some of the names on 
the list because it looked like a "who's who of black 
bourgeoisie."  Daka expects that Mbeki will make some 
changes to the list because he wants people on the Council 
who have contributed to empowerment rather than those who 
have become enriched through BEE.  Until the Council becomes 
official, nobody is providing this Advisory service.  While 
DTI officials are the day-to-day functionaries responsible 
for communicating black economic empowerment policy to the 
public, Daka criticized many at DTI for insufficiently 
understanding the policy. 
 
FRAZER