US embassy cable - 04PRETORIA5063

UNCLAS SECTION 01 OF 02 PRETORIA 005063 
 
SIPDIS 
 
DEPT FOR AF/EPS AND AF/S/TCRAIG AND KGAITHER 
COMMERCE FOR 4510/ITA/IEP/ANESA/OA/JDIEMOND 
TREASURY FOR BRESNICK, LSTURM, AND AJEWELL 
DEPT PASS USTR FOR PCOLEMAN, WJACKSON AND CHAMILTON 
 
SENSITIVE 
 
E.O. 12958: N/A 
TAGS: EINV, ETRD, EFIN, ECIN, ECON, SF 
SUBJECT:  DTI OFFICIAL CLARIFIES BEE CODES OF GOOD PRACTICE 
 
(U) This cable is sensitive but unclassified.  Not for 
Internet distribution. 
 
1.  (SBU)  SUMMARY.  Department of Trade and Industry (DTI) 
Director of Black Economic Empowerment (BEE) Jeffrey Ndumo 
met with representatives from U.S. firms at the American 
Chamber of Commerce in South Africa (AmCham).  Ndumo said 
that DTI would release nine Codes of Good Practice in two 
phases over the next several months.  He said that a new DTI 
scorecard containing targets for each Charter component 
would be included in the Codes.  Ndumo announced the 
formation of a DTI "BEE Secretariat," which will engage with 
all sector BEE councils.  He also said that DTI would 
announce the National BEE Advisory Council this year.  Ndumo 
criticized state-owned companies (SOEs) who attendees 
claimed are requiring firms to comply with multiple industry 
targets.  He said that this is a "misunderstanding and 
misapplication of BEE" and that he would address this issue 
with SOEs and government agencies in an upcoming roadshow. 
Ndumo thanked AmCham and its members for their engagement 
with DTI on BEE policy.  He said that no other business 
chamber had presented DTI with the thoughtful and critical 
analysis of BEE the way that AmCham had.  END SUMMARY. 
 
2.  (U) On November 10, 2004, Department of Trade and 
Industry (DTI) Director of Black Economic Empowerment (BEE) 
Jeffrey Ndumo met with representatives from U.S. firms at 
the American Chamber of Commerce in South Africa (AmCham). 
Ndumo spoke about DTI's Codes of Good Practice and responded 
to questions and concerns that U.S. firms have about BEE. 
 
3.  (U) Ndumo explained that DTI would release nine Codes of 
Good Practice in two phases over the next several months. 
Phase one includes three Codes, which will be published 
before the end of this year.  Phase two Codes are scheduled 
for release in February 2005.  Each Code will attempt to 
explain all the issues pertaining to a particular BEE 
element.  The Codes will consist of one or more 
"statements."  A "statement" includes a related set of 
principles guiding the implementation of one BEE issue. 
Ndumo pointed out that these Codes are not to be confused 
with industry Charters that, once approved and gazetted by 
DTI, will also be referred to as Codes of Good Practice.  A 
list of DTI's Codes and statements to-date follows: 
 
PHASE ONE: 
Code 000: Framework 
     Statement 000: Conceptual Framework 
     Statement 020: Charter Guidelines 
     Statement 030: BEE Council 
     Statement 070: Broad-based BEE Implementation 
     Statement 090: Glossary 
Code 100: Ownership 
     Statement 100: Ownership 
     Statement 140: Government Ownership 
Code 200: Management 
     Statement 200: Management 
 
PHASE TWO: 
Code 300: Employment Equity 
Code 400: Skills Development 
Code 500: Affirmative Action 
Code 600: Enterprise Development 
Code 700: Corporate Social Investment (CSI) 
Code 800: BEE Practice Notes 
 
4.  (U) As part of Code 000, Ndumo said that DTI would 
release a new scorecard containing targets for each 
component.  The new scorecard will also allocate points for 
the inclusion of women.  Preferential procurement will be 
based on BEE contribution.  Bonus points will be given for 
over-performance.  The scorecard will include more options 
for indicators and sub-minimum scores will be required to 
achieve BEE-compliant status.  When asked about potential 
differences between existing Charter targets and DTI's new 
scorecard targets, Ndumo responded that DTI had looked at 
market trends emerging in the industry scorecards.  Ndumo 
said that industry would find DTI's targets "reasonable." 
 
5.  (U) Ndumo said that DTI is forming a "BEE Secretariat," 
which will be a DTI organ.  The Secretariat will absorb 
existing DTI personnel dedicated to BEE and will engage with 
all sector councils.  The Director of the Secretariat will 
sit on the National BEE Advisory Council.  Government 
decisions pertaining to BEE, however, will be made by the 
Advisory Council, which Ndumo said would be announced this 
year. 
 
6.  (U) Several people in attendance commented to Ndumo that 
state-owned enterprises (SOEs) across various sectors are 
requiring firms to comply with the SOE's respective industry 
targets.  Ndumo said that this is a "misunderstanding and 
misapplication of BEE" and that he would address this issue 
with SOEs and government agencies in an upcoming roadshow. 
 
7.  (SBU) Ndumo thanked AmCham and its members for their 
engagement with DTI on BEE policy.  He said that no other 
business chamber had presented DTI with the thoughtful and 
critical analysis of BEE the way that AmCham had.  Ndumo 
welcomed future opportunities to engage with AmCham and 
American firms in South Africa. 
 
FRAZER