‘Flawed BEE legislation will evolve’

THE USE OF a black economic empowerment (BEE) deal as an exit strategy to get rid of a business or a dud investment is possibly the most cynical abuse of the system, says independent analyst Reg Rumney. Commenting on finance minister Trevor Manuel’s statement to the Financial Times last week that BEE legislation was flawed, had been abused, and was now in need of review, Rumney said the recently gazetted BEE codes were designed to fix some of the abuses to which Manuel referred. “There are all kinds of things that businesses have done – good and bad, cynical and genuine,” Manuel told the financial newspaper. “For various reasons BEE has been flawed but it will evolve. It’s not a policy cast in iron, and there is a yearly review process,” said Rumney. The sale by AngloGold of the Harmony Gold Mining company to African Rainbow Minerals (ARM) when the gold price had dropped was an example of “selling a dud”, says Rumney. The irony is that ARM’s Patrice Motsepe “made a killing” when the price rose. “Another cynical abuse is the making of deals for compliance with BEE legislation,” said Rumney, “such as fronting black people by recruiting black managers or board members as token gestures,” he added.