Dirty tricks curbing SA’s BEE drive

JOHANNESBURG Many companies are using dirty tricks to curb opportunities for the black majority in the mining sector, a South African minister said on Tuesday.

Lulama Xingwana, deputy minister of minerals and energy, painted a graphic picture of various “tricks” used by some companies to go around transformation as required under the government’s Black Economic Empowerment (BEE) initiative. BEE aims at giving blacks a bigger slice of the economy, opportunities they were denied during decades of apartheid rule.”Many representatives of mining companies try all the tricks in the book to superficially transform their companies,” Xingwana told a mining sector BEE conference in Johannesburg.”Some of the companies are busy working out tricks on how to overcome the law, how to go around the law, and they are very clever at it,” she said.”There are many such cases.We now have learnt to take all BEE deals with a pinch of salt.We intend to get to the bottom of those tricks, and also on top of them,” Xingwana said.South Africa – the world’s biggest gold, platinum and chromium producer, with significant iron ore, coal and other key minerals – enacted a wide-ranging Mining Charter in May 2004.The law sets targets on equity ownership, increasing blacks in management and raising living standards for miners.Under the law, all mining rights are controlled by the state, and private companies must reapply for mining licences, proving they have a plan in place to meet the targets.The charter demands that 15 per cent of a company’s South African mines are owned by blacks by 2009 and 26 per cent by 2014.Xingwana said some of the problems noted including the practice of selling mining rights by black entities “to the highest bidder to fund expensive lifestyles rather than invest.”Some black-owned firms also diluted their stakes after being granted mining or prospecting rights by selling up to 70 percent of equity or more to white companies – with the money going into pockets instead of prospecting or expanding of mines.”The money is not being invested in the project, there is no exploration, the money was just for wealth accumulation, buying big mansions…that is defeating the purpose of BEE,” she said.Xingwana also slammed what she termed “sweetheart BEEs” or those that involved the same black companies being partnered by bigger mining houses when those big firms unveil BEE deals.She also criticised the use of black “fronts” who are often given a stake in the white-controlled company, but do little to help create opportunities for other blacks at such companies.Sandile Nogxina, the director general at the minerals department, said more staff was being hired to try to speed up issuing of mining rights and to help with the vetting of complicated BEE deals, including out-sourcing expertise.He said complicated equity-based deals were almost always viewed with suspicion by his department.”These complex deals derive from the fact that people want to create fronts and hidden tricks that when looked at in detail may reveal the equity stake given to blacks, or their powers in the company are much less than meets the eye,” he said.-Nampa-ReutersBEE aims at giving blacks a bigger slice of the economy, opportunities they were denied during decades of apartheid rule.”Many representatives of mining companies try all the tricks in the book to superficially transform their companies,” Xingwana told a mining sector BEE conference in Johannesburg.”Some of the companies are busy working out tricks on how to overcome the law, how to go around the law, and they are very clever at it,” she said.”There are many such cases.We now have learnt to take all BEE deals with a pinch of salt.We intend to get to the bottom of those tricks, and also on top of them,” Xingwana said.South Africa – the world’s biggest gold, platinum and chromium producer, with significant iron ore, coal and other key minerals – enacted a wide-ranging Mining Charter in May 2004.The law sets targets on equity ownership, increasing blacks in management and raising living standards for miners.Under the law, all mining rights are controlled by the state, and private companies must reapply for mining licences, proving they have a plan in place to meet the targets.The charter demands that 15 per cent of a company’s South African mines are owned by blacks by 2009 and 26 per cent by 2014.Xingwana said some of the problems noted including the practice of selling mining rights by black entities “to the highest bidder to fund expensive lifestyles rather than invest.”Some black-owned firms also diluted their stakes after being granted mining or prospecting rights by selling up to 70 percent of equity or more to white companies – with the money going into pockets instead of prospecting or expanding of mines.”The money is not being invested in the project, there is no exploration, the money was just for wealth accumulation, buying big mansions…that is defeating the purpose of BEE,” she said.Xingwana also slammed what she termed “sweetheart BEEs” or those that involved the same black companies being partnered by bigger mining houses when those big firms unveil BEE deals.She also criticised the use of black “fronts” who are often given a stake in the white-controlled company, but do little to help create opportunities for other blacks at such companies.Sandile Nogxina, the director general at the minerals department, said more staff was being hired to try to speed up issuing of mining rights and to help with the vetting of complicated BEE deals, including out-sourcing expertise.He said complicated equity-based deals were almost always viewed with suspicion by his department.”These complex deals derive from the fact that people want to create fronts and hidden tricks that when looked at in detail may reveal the equity stake given to blacks, or their powers in the company are much less than meets the eye,” he said.-Nampa-Reuters