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The court has spoken: Rob Davies was not always above board

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Janisch is a BEE compliance expert based in Johannesburg. He's been in the industry for 15 years and still hopes that the government will introduce a policy that will result in the transformation of the country. Until then he will continue educating the South African public as to what the BEE codes require and how to deliver on them.

History books are not going to paint many of Jacob Zuma’s ministers as competent or ethical. Pravin Gordhan is likely to be the only one that people in 20 years will regard as a true hero. Rob Davies, not so much. And that is the finding not of any commentator, but a court.

It has long been my contention that Rob Davies, the former minister of trade and industry, was the worst of the lot. He was completely the wrong man to be looking after trade and industry. His ardent communist bent was not able to understand the concept of commerce, that he thought he could control through extreme regulation. 

Some may remember his attempt to regulate all business behaviour by requiring them to obtain a licence to trade – this was every business, from the local broom seller to Eskom.

It was under Davies’ watch that the revised BEE codes were gazetted. At the time it was not clear why he would want to make these amendments as the codes at the time appeared to be doing a fantastic job. 

Davies told a disbelieving public that the revised codes would accelerate transformation and prohibit fronting – seven years later they’ve done neither. All they’ve done is provided a stumbling block for non-black owned businesses to compete with black-owned businesses (who are by and large exempt from BEE compliance). 

It is my firm belief that Davies was hell-bent on adding more and more layers of compliance and regulation into the South African economy, and that he would do so by stealth if necessary.

It was harder to push through business licences because that would impact on the whole of the economy — the voice to block this measure was loud. BEE regulations and proclamations were easier because transformation is a sensitive subject. 

While most businesses in South Africa pay lip service to BEE compliance (in spite of their outward manifestation to be committed to empowerment), they are unlikely to object to draconian transformation policies because the PR fallout would be disastrous. 

Davies was probably acutely aware of this when he published his BEE drafts for comment. He could in effect publish anything he wanted, knowing that the more powerful corporates would rubber-stamp his garish notions. Smaller businesses duly lodged their comments and objections and were summarily ignored.

However, one issue was taken on review and the high court found that Davies misled the public. The court case, as reported by Duncan McLeod on Tech Central on 20 July 2020, told of how it appeared that Davies, or his department, was so determined to push through a certain pronouncement that they actually lied to the public about a certain application.

…the court found that Davies misled (read – lied to) the commenting public. Did Davies do this on purposes, or did he merely sign a document that was presented to him?

The issue revolves around Davies allocating Telkom BEE facilitator status, which rendered Telkom fully compliant under the ownership element of the ICT BEE scorecard. 

The advantage to Telkom is massive. About 51% of Telkom’s shareholding is made up of investors on the JSE. 

It is possible to derive a black ownership scorecard out of those shareholders, but it is onerous, expensive and very rarely delivers anything close to the target under any code (the ICT code sets a target of 30% black ownership). 

Telkom, therefore, walked into a verification with a guaranteed 25 points on the scorecard – all it needs to do is worry about the balance of the elements. These 25 points can decide whether a company is competitive or not.

Altron and MTN took exception to this and went to the high court to air their grievances. The Pretoria High Court found that Telkom had not, in fact, made the application for this BEE facilitator status, even though Davies’ averred on the document for comment that it had made such an application. 

McLeod writes:

“No such application was ever made. An application was cobbled together by the department of trade & industry; the BEE chief directorate requested the designation; the director-general recommended the designation to the minister; and the minister approved the designation. The department of trade & industry was both the applicant and a participant in the decision-making process.

“There is a material difference between the decision proposed in the notice and the decision which was made. The notice suggested a decision would be made to grant Telkom facilitator status whereas the final approval granted facilitator status to the government of South Africa represented by the office of the presidency. This difference materially impacts upon what was proposed to be done, what the public perceived was proposed to be done, and what the public was invited to comment upon.”

In other words, the court found that Davies misled (read – lied to) the commenting public. Did Davies do this on purposes, or did he merely sign a document that was presented to him?

There are a few instances that suggest that he just signed stuff or allowed his minions to publish documents with his signature on them. Davies is a learned man, the published BEE codes show no sign of any person with a basic matric having written them. I think he was a victim of agendas within the DTI and powerful lobby groups influencing his judgment in the name of transformation.

Whatever the case is, this must open the potential to query a number of Davies’ gazettings over the 10 years that he attempted to run the country into the ground as Zuma’s dogmatic lackey.

The BEE targets set up by Davies defy all forms of logic and could not have been condoned by the public that had to implement them. Davies’ final gift to the public was a donation of 2.5% of a company’s payroll to black students at higher education institutions in exchange for four BEE points. This is beyond comprehension – to see this in perspective, any one of the major financial institutions would need to shell out in the region of half a billion rand in bursaries for four BEE points (explain that to your shareholders).

It is very unlikely that any company would have agreed to this. Yet it was gazetted.

If there ever was a time to litigate it would be now. I suspect that the procedure that Davies followed would not pass constitutional muster. I can’t wait to book my seat in the nearest courthouse. DM/BM

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