New South African Law: Comply With Black Economic Empowerment

New South African Law: Comply With Black Economic Empowerment

South Africa this week approved a bill that encourages companies to hire and promote more black staff and buy more goods and services from black-owned companies to address racial inequalities stemming from apartheid, which ended in 1994, according to a  Bloomberg Business Week report.

The Broad-Based Black Economic Empowerment Bill, aka BEE, makes it illegal to misrepresent a company’s empowerment status, which the government considers when awarding contracts or licenses, the report says.

Companies should be fined at least 10 percent of sales for misrepresenting measures taken to promote black economic empowerment, the new laws say.

Potential for abuse is great, said Trade and Industry Minister Rob Davies in the report. “You put somebody in some position so that you can pretend that the enterprise is something other than what it is in terms of being black empowered,” he said. “It is a form of fraud.”

The bill also provides for a new commission to oversee compliance and investigate violation complaints.

White South Africans represent 9 percent of the population but control more than 90 percent of the value of shares on the Johannesburg stock exchange, according to government data, the report says. Whites hold 73 percent of top business management posts, according to an April 20 Employment Equity Commission report.

“Black empowerment remains a necessary political and social imperative,” Davies said in the Bloomberg Business Week report. “There is a requirement that we redress the disadvantage that people had in the past.”