Forum Shopping Making the ‘glass slipper’ fit

Cinderella’s ‘glass slipper’ is the perfect metaphor for interpretations that

are guided by The Codes of Good Practice (The Codes). Essentially,

as with the ‘glass slipper’, there is only one fit, where there is only one

applicable interpretation. No matter how one tries to push, prod, or

manipulate one’s foot into it, the ‘glass slipper’ either fits or it does not.

Like in the Cinderella tale, where the prince’s footman goes from door

to door to find the person with the perfect fit for the ‘glass slipper’,

organisations do the same when seeking the ideal interpretation of The

Codes. In B-BBEE terms, this refers to ‘forum shopping’.

This article aims to include all stakeholders in the B-BBEE space

to illustrate their roles and responsibilities in driving our national

transformation agenda. In pinpointing all players in the B-BBEE space,

organisations will have no doubt who wears the ‘glass slipper’; there is

only one party in the entire B-BBEE space that can provide clarity on

interpretations.

Who operates in the B-BBEE space?

The first sphere is the client, being the organisation or measured entity

implementing a B-BBEE Strategy, who then needs their results verified

based on evidence of their transformation milestones.

The second sphere represents B-BBEE Consultants, who guide

organisations in developing and implementing initiatives to feed their

B-BBEE Scorecard. A B-BBEE Rating Agency then verifies these results

based on the evidence provided.

The third and last sphere in the B-BBEE space consists of The

Department of Trade, Industry and Competition (dtic), specifically the

B-BBEE Policy Unit that establishes B-BBEE Policy; SANAS, who

oversees the standards to which B-BBEE Rating Agencies operate;

and the B-BBEE Commission, whose mandate is to oversees the fair,

meaningful and sustainable implementation of B-BBEE in line with the

B-BBEE Act

(The Act).

Essentially, organisations are held accountable for their B-BBEE claims

by the B-BBEE Commission. B-BBEE Rating Agencies are accountable

to SANAS. However, what is evident is that B-BBEE Professionals are

not held accountable by any governing body, but only their ethics and

South African law.

How is ‘forum shopping’ initiated, or what is the

process to make the ‘glass slipper’ fit?

‘Forum shopping’ takes place in both the first and second spheres of

the B-BBEE space. The process begins when an organisation poses

a query on an interpretation by their B-BBEE Consultant or B-BBEE

Rating Agency. For the sake of this article, both parties will be referred

to as ‘consulting parties’. In turn, more often than not, the ‘consulting

parties’ endeavour to settle the issues between themselves, or else seek

clarity on an interpretation with the dtic’s B-BBEE Unit, SANAS and/or

the B-BBEE Commission.

What is the process of ‘forum shopping’, or how

many parties try to manipulate their foot into the

‘glass slipper’?

Due to a general lack of B-BBEE knowledge at a corporate level, when

facing challenges on an interpretation, clients immediately contact their

‘consulting parties’ for their opinion on specific interpretations, hoping

that it aligns with their B-BBEE Strategy. In sphere 1, the following

typically occurs:

> Organisations contact ‘consulting party number 1’ who provide

their interpretation on an issue. The outcome translates to a

realignment of the organisation’s B-BBEE Strategy.

The organisation is not happy with the feedback from ‘consulting

party number 1’.

To make the ‘glass slipper’ fit, the organisation seeks an opinion

from ‘consulting party number 2’. The response is the one

they were seeking. Subsequently, the organisation chooses to

use the second opinion on the interpretation in question to align

with its B-BBEE Strategy. A claim is made based on the more

suitable interpretation provided by ‘consulting party number 2’.

Justification for using the opinion provided by ‘consulting party

number is that it was generated by what the organisation

deemed to be a qualified party.

The same tactic applies in sphere 2 when ‘consulting parties’ need

clarity on an interpretation presented by their client. The scenario

generally follows one or all of the following processes when clarity on an

interpretation is required:

> An organisation’s ‘consulting parties’ are summoned to a meeting.

The challenge regarding an interpretation is put forward. Both

parties frantically analyse The Codes to find the most advantageous

clarity. However, both parties realise that the clarity the organisation

seeks crosses an ethical line, either significantly or marginally.

The meeting adjourns as consulting parties commit to investigate

the matter further.

> When the ‘consulting parties’ seek affirmation on the interpretation

that they presented to their client, they approach the third sphere.

A request for an opinion is put forward to the B-BBEE

Commission, the B-BBEE Unit at the dtic and SANAS.

Unfortunately, more and more organisations take the advice that makes

the ‘glass slipper’ fit to benefit their scorecard. One should always bear

in mind that an interpretation that benefits an organisation’s scorecard

does not always filter through to empower ‘Black’ People or align with

The Act.

When does an unethical decision become Fronting

Practice, or when does the ‘glass slipper’ shatter?

An unethical decision is implementing a B-BBEE initiative that does

not align with the expectations of The Codes. It remains just that, an

unethical decision until such a time as a claim is made and accepted

during a B-BBEE Verification and an organisation trades with

misrepresented B-BBEE Credentials.

Therefore, an organisation can reverse any unethical decisions until the

time they make a claim. Hence, a ‘knowing person’ who moves from

making an unethical decision to engaging in Fronting Practice should be

fully aware of the consequence of doing so, which may be imprisonment

or a hefty fine.

Whose interpretation counts, or who wears the

‘glass slipper’?

As the basis of B-BBEE legislation is the interpretation of The Act, the

Codes, issued Guidelines, Clarification Statements and Practice Guides,

organisations must understand where the buck stops and who wears

the ‘glass slipper’. In other words, who has the jurisdiction to have the

final say about the real meaning of an interpretation?

Let’s take a closer look at the roles, mandates and power of all parties

who form part of the process of ‘forum shopping’.

SPHERE 1 | An organisation or the measured entity

An organisation measured on its B-BBEE performance seeks or

challenges an interpretation on a matter in The Code against which it

is measured. Ultimately it is the directors, managers and employees of

an organisation who are personally responsible and accountable for

the evidence featuring in its B-BBEE verification file. Those responsible

for preparing a B-BBEE verification file, and any ‘knowing people’, will

ultimately face the consequences of using an invalid interpretation as

part of their claim on their scorecard, irrespective of where it came from.

SPHERE 2 | The B-BBEE Rating Agency

This party’s role is to independently verify the data and evidence

provided by an organisation to validate its B-BBEE Scorecard. Bear in

mind that the R47-03 prohibits a B-BBEE Rating Agency from advising

an organisation on their B-BBEE Strategy or its implementation. Its role

is only to verify the evidence provided.

SPHERE 2 | The B-BBEE Consultant

This party guides organisations on their B-BBEE Strategy and

implementation methodology before their B-BBEE Verification. They are

allowed to assist an organisation in preparing their B-BBEE verification

file. They may not, however, participate in a B-BBEE Verification in any

manner whatsoever.

SPHERE 3 | SANAS

This party’s responsibility is to accredit B-BBEE Rating Agencies to

ensure that they conduct B-BBEE Verifications according to the R47-03

requirements. SANAS holds B-BBEE Rating Agencies accountable for

their actions and issues non-conformances for not aligning with the

R47-03. In effect, SANAS does not interface with organisations or hold

them directly accountable for invalid evidence put forward in a B-BBEE

Verification.

SPHERE 3 | The dtic’s B-BBEE Policy Unit

The B-BBEE Policy Unit within the dtic directs B-BBEE Policy regarding

drafting, gazetting and repealing any B-BBEE Legislation. Its role is to

draft legislation to address the economic empowerment objectives on

behalf of the Minister. Its role ensures that legislation incorporates and

supports the National Development Plan. In effect, the B-BBEE Policy

Unit does not interface with organisations or hold them accountable for

interpreting the legislation it drafts.

SPHERE 3 | The B-BBEE Commission

The B-BBEE Commission’s role is to ensure accurate, fair and

transparent implementation of B-BBEE initiatives in line with The

Act. The B-BBEE Commission has the infrastructure and resources

to provide an organisation with support on interpretational issues.

Processes are in place to allow for challenges should an interpretation

not align with that of an organisation. The B-BBEE Commission’s role

is to interface with all organisations. It is the only party with the ability to

initiate an investigation and direct a matter to the National Prosecuting

Authority or the South African Police Service.

As The Act provides for one regulator only, the B-BBEE Commission

is the only party that can provide clarity for an organisation challenging

an interpretation; however, such an interpretation is non-binding as per

The Act. The same legislation mandates that any matter investigated

by the B-BBEE Commission, which uncovers a criminal offence, must

be referred to the National Prosecuting Authority or an appropriate

South African Police Service division. A Memorandum of Understanding

entered into between the B-BBEE Commission and the South African

Revenue Services (SARS) in May 2018 allows the same response

from SARS.

The B-BBEE Commission was established as an office within the dtic

administration, directed by section 13B of the Amended Act 2013.

Since its establishment, it has gained purpose and momentum, whereby

its capacity increases year-on-year.

Taking all parties’ roles and responsibilities in all three spheres in the

B-BBEE chain into account, it is evident that the B-BBEE Commission

wears the ‘glass slipper’.

For many operating in Sphere 1 and 2 in the B-BBEE space, ‘forum

shopping’ for the perfect fit for the ‘glass slipper’ is more about

continuing learned behaviours, which precede the establishment of

the B-BBEE Commission. Final accountability for an organisation’s

scorecard lies with it alone. Unfortunately, interpretations are not

always black and white as they must incorporate the expectations of

The Codes and the intent of The Act. Therefore, when considering all

opinions on interpretations, an organisation must weigh up the pros and

cons on their scorecard, bearing in mind who wears the ‘glass slipper’.