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High court rules government to review BEE criteria for SMME relief

THE SOUTH AFRICAN / 22 JUNE 2020 - 13.29 / DAN MEYER

The Pretoria High Court has ordered government to review it’s criteria determining whether businesses are eligible for relief funding based on their adherence to Broad Based Black Economic Empowerment (BBBEE or BEE) policies after the Democratic Alliance (DA) launched a bid to see the regulations abandoned.

The DA argued that the “racist” criteria, wherein the Department of Small Business Development requires that small businesses seeking relief are BEE compliant, are “both morally and legally indefensible”.

Minister of Small Business and Development, Khumbudzo Ntshavheni. Photo: GCIS

The Pretoria High Court dismissed certain aspects of the DA’s application, but determined that the criteria could not reasonably pass muster in South Africa’s constitutional democracy.

COURT RULES THAT GOVERNMENT MUST REVIEW ‘VAGUE’ BEE CRITERIA

The court ruled on Friday 19 June that the requirements are “vague” and directed towards a disingenuous objective.

“It is for the minister to make sure that the criteria to be employed for the disbursement of public funds are not left to a simple laundry list of hygiene and procedural characteristics buttressed by one vague statement that ‘priority would be given’ to women, the youth and the disabled,” the court said.

“Such a broad phrase without any guidance as to what weight is to be given to these criteria simply cannot pass muster in our constitutional democracy.”

The ruling determined that the distribution of relief funding, while open to ministerial discretion, should be clear and reasonable, and said that the current regulations fail to qualify in this regard.

“The ostensible criteria fall foul of basic principles of the rule of law that such the requirement that the exercise of a public power must be certain, even, if as obviously is the case in these circumstances, discretion to allocate funds is permissible.”

DA TO APPEAL COURT’S DISMISSAL OF APPLICATION COMPONENTS

The DA’s Shadow Minister of Small Business Development, Zakhele Mbhele, said that the DA welcomes the court’s upholding of their argument against the laws, but said that the opposition party would appeal the dismissal of various other points submitted in their application.

“After a review of the High Court judgment in our case against the application of BBBEE criteria for COVID-19 relief funding, the Democratic Alliance (DA) has decided to file an appeal to continue our fight against the wholesale entrenchment of racial criteria in government policy and administration,” he said.

“While we are pleased that the court upheld our argument that the government had acted unlawfully by failing to provide clarity on how relief criteria would be applied, the larger issue, of racial discrimination in disaster relief, requires urgent reconsideration in a higher court.”

He said that the laws are “legally indefensible” and discriminatory.

“It is both morally and legally indefensible that racist criteria are used in the context of distributing disaster relief.”

“The precedent that would otherwise be created is a huge setback for non-racialism, and intensifies the impulse for the lens of race being applied to everything.”

“We maintain that in this context, there is a valid argument and strong legal interpretation to require rational exemptions from BBBEE policy.”

‘BEE IS HERE TO STAY’ – RAMAPHOSA

On Thursday 18 June, President Cyril Ramaphosa said that government would double down on efforts to promote BEE policies, saying that such measures are of vital importance if South Africa’s previously disadvantaged are to be afforded a realistic opportunity to achieve economic success.

“The only way [to grow the economy] is to bring black people into the mainstream of the economy,” he said during a Parliamentary Q&A session.

“They were deliberately excluded, so we need to implement the provisions of our constitutions. There must be legislative measures that will enable us to do precisely that.”

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LINK : https://www.thesouthafrican.com/news/bee-criteria-relief-funding-smmes-small-business-da-22-june-2020/

Disclaimer - The views expressed here are not necessarily those of the BEE CHAMBER

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