While President Cyril Ramaphosa tries to woo investors to sink their capital into the sinking economy that is South Africa, the bureaucrats below deck are busy smashing holes into the hull. The BEE Commission, it was reported inlast week, has decided that trusts no longer count for BEE. To restructure these schemes and deals could cost tens of billions of rand. This could leave investors scrambling for the lifeboats.
These may well be legitimate concerns and a number of questions can be raised. A trust that helps fund university scholarships may give a student a needed leg up, but is that real ownership? Do the people in a community endowed with a trust even know they may have voting rights and can attend the AGM? But the fact of the matter is that such trusts have been considered compliant for over a decade – until now, apparently.
Among sectors, the mining industry at least should be in the clear. The Department of Mineral Resources said it could not immediately comment – on the understandable grounds that there has been no formal statement issued on the matter for it to study.The mining industry is governed by the MPRDA and adheres to the Mining Charter and the structures of empowerment vehicles is reviewed and approved by the DMR,” the Minerals Council South Africa said in a statement.
Still, there are lingering concerns. One mining executive, who asked not to be named, said, “we are not quite sure about the matter”. The questions raised could bring fresh scrutiny to the mining industry’s trusts. After experiencing several dizzying policy shifts under the Mining Charter, the industry can hardly afford more uncertainty, and does not have a lot of spare cash to restructure existing schemes.
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