B-BBEE: Verification headaches – lack of consensus causes massive disruptions

One of the major weaknesses with the B-BBEE programme is the lack of oversight and uniformity in how the Codes of Good Practice are interpreted – this is partly due to poor drafting by the legislature, but also due to the way that the verification industry operates. B-BBEE verification is broadly divided into two streams with their own oversight bodies – the normal verification agencies fall under one body and auditors fall under another. While these bodies do issue guidance notes on interpreting the Codes, these notes are not binding and are not legally recognised. They are sometimes also not very enlightened. Due to the often ambiguous and problematic nature of the Codes, this means that verification agencies can differ materially in how they interpret the Codes, resulting in massive uncertainty. In fact, the problem is so severe, that one often finds analysts within the same verification agency not agreeing with each other. We have seen situations where the same verification agency treats two companies differently on the same issue, creating a massive disadvantage for the one and advantaging the other – this is completely arbitrary and it seems it is a matter of the whim of the analyst that one is unlucky enough to get. This means that a company simply has no idea what the outcome of its verification will be and cannot effectively project certain elements of its scorecard in advance. Unfortunately the verification agencies tend not to adopt an enlightened attitude regarding their interpretations either and are often not open to discussions – they simply decide on an interpretation (however flawed it may be) and stick to it, to the detriment of the measured entity.

Examples of issues where verification agencies can differ wildly include the date of measurement for procurement purposes; the date of measurement of staff for employment equity purposes; and whether an employee qualifies as a “black person.” Some verification agencies are even going so far as to refuse to verify companies under the new Codes even though the law states that they are obliged to do so! This lack of uniformity creates massive uncertainty and there is an urgent need for centralised oversight and agreement on the interpretation of the Codes.

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