House Chair, I think it is significant that we will be debating this amending Bill today on this occasion following a debate on the historic and unfortunate Natives Land Act of 1913, because the history of disadvantage and underdevelopment that was inflicted on the majority of the people on the basis of racial discrimination during colonialism and apartheid is, in fact, the context of this particular piece of legislation.
We have long argued that broadening economic participation is both a political and an economic imperative. It's a political imperative because it does need to provide redress to those that were disadvantaged in the past. But it is also an economic imperative because those countries that draw on the skills and talents of their people, are the countries which succeed on the economic front.
At the beginning of this administration, the President completed the appointment of the last institution which was provided for under the 2003 Act - that was at presidential level - the Black Economic Advisory Council. In the deliberations of the advisory council, we looked at the impact of the black economic empowerment, BEE, legislation to date and we found that while it had some notable successes, there were some shortcomings. What we noted in particular was that it had a fairly limited impact on the economy as a whole. Secondly, we found that those parts of the scorecards which were most important from the point of view of enterprise development, skills development, were particularly underrepresented in the efforts of those involved in black economic empowerment.
We have set out on a process of introducing amendments. First of all, amendments to the codes of good practice which were released for public comment and which we intend to reintroduce in a couple of months' time are intended to introduce subminimum points to be scored by those companies that want to gain points in black economic empowerment in areas like supply and development, skills development as well as ownership.
Secondly, we are introducing this Bill today, which deals with three particular issues. The first is the question of complex fronting. We found that there are a number of cases of fronting and many of them have become more complex in nature. Fronting is an offence at two levels. Firstly, it's an offence against the people who are purported to be beneficiaries of black economic empowerment, but whose benefits are actually a lot less than they may seem.
Secondly, fronting enables companies to present themselves to government, to other agencies and to the public at large as though they are black- empowered whereas in fact they are not. There have been a number of cases in courts around fronting, but all of these had to operate in terms of the common law definition of fraud, which is in fact what fronting is.
The Bill before us today will define fronting as a statutory offence. It will make it easier for us to be able to deal with the various forms of fronting which this complex process is now taking. It will also establish a commission - a dedicated commission - that will operate as a trade entity within the Department of Trade and Industry, but will act impartially without fear or favour. Its tasks include the receiving and analysis of reports from state entities; surveying the scene as far as BEE is concerned; strengthening and fostering collaboration between the public and private sectors; and it will also receive and investigate complaints related to BEE fronting. It will provide a dedicated mechanism which those who had alleged fronting had taken place can approach. It will also have a range of potential solutions that it can provide.
The establishment of the commission will also enable us to remove from the codes one piece of what I can describe as business red tape. At the moment those who are engaged in supply and development contracts with small black- owned businesses require that those small businesses go to the verification agencies and pay something like R30 000 to have somebody tell them that they are black-owned.
In the codes we will be saying that 100% black-owned businesses automatically will be recognised as Level One. Those who have 50% ownership or more will automatically be recognised as Level Two. You will not be able to ask them to go for a verification certificate to prove that, but you will have to accept an affidavit. If they are lying, the mechanism is to go the commission. That will enable us to significantly lessen the burden that is currently imposed on small black supplier businesses.
Secondly, the Bill will regulate the verification processionals. There will be the independent regulatory board of auditors, which will play this role. Professionals who were involved in any kind of misleading rulings will also be subject to this Bill.
There is also a very important part of the Bill, which is about alignment to legislation. I have got no time to deal with that. That was introduced at the committee stage. I have pleasure in commending this Bill to the House. Thank you very much. [Applause.]