Fight to save charter

2010-01-16 13:46

THE financial services charter, which encapsulates the

transformation commitments of banks and insurers, may be resuscitated this


A meeting is already planned for this week to work towards an

agreement on the levels of direct ownership for black people in the country’s

major banks and insurance companies.

Modise Motloba, the former president of the Association of Black

Securities and Investment Professionals, has been roped in as a trouble-shooter

to heal the rift between the warring parties, who are fighting over what

percentage of equity ownership of the ­financial services industry should be in

black hands.

“There are behind-the-scenes discussions led by the facilitator

(Motloba) to zoom in on areas of disagreement. Come the end of February, this

matter must be wrapped up,” said Thabo Masombuka, the Department of Trade and

Industry’s director for BEE partnerships.

Motloba was black businesses’ chief negotiator in the process that

led to the conclusion of the charter.

The charter has been on life support since November’s public spat

between organised labour and the banking industry over the ownership


It had been in limbo for the previous 18 months and has delayed the

process of gazetting the industry’s black economic empowerment (BEE) charter

into a BEE code of good practice. The code is a government-sanctioned blueprint

against which future and current empowerment deals must be measured.

At the centre of the rift is a coalition of 50 civil society

­organisations led by labour federation Cosatu and its close ­ally, the SA

Communist Party, which are demanding that the charter not be gazetted if it

fails to comply with the code’s black direct ownership target of 15%.

On the other hand, financial sector trade associations led by the

Banking Association of SA (Basa) and the Association for Savings &

Investment SA (Asisa) want the charter to be gazetted with a black ownership

target of 10% – a level agreed on when the charter was adopted in 2003.

The push towards the 15% ownership level could open the door for

other black entrepreneurs or for existing black shareholders to increase their

stakes, but funding these transactions has been a serious challenge.

In November a frustrated Cas Coovadia, the managing director of

Basa, wrote a letter to Finance Minister Pravin Gordhan in which he said that

the banking sector was pulling out of the Financial Sector Charter Council


The FSCC oversees the implementation of the empowerment charter in

the financial sector.

Coovadia’s letter elicited a strong response from Jan Mahlangu,

Cosatu’s retirement funds policy co-ordinator, in which he accused the banks of

being “anti-transformation”.

In early December Asisa ­also threatened to stop funding the


At a council meeting held in mid-December, Masombuka asked all the

parties which had made public comments to withdraw their statements, and they

subsequently agreed to do so.

He said the government was concerned about the delay in the

gazetting of the charter. It has failed to meet deadlines before, the latest

being the end of August last year.

“Government sees this uncertainty (the gazetting of the charter) as

a serious impediment to transformation.

“However, we will not ­gazette a charter that flies in the face of

transformation. At worst it must meet the targets of the codes or at best exceed

them,” Masombuka said.

Mahlangu denied that ­Cosatu had been asked to ­retract its


“We were merely responding to Basa’s letter. We said if Basa was

committed to transformation it must withdraw its letter, and it did,” he


He said he was hopeful that the charter would be gazetted this

year, with the help of the facilitator.

“We are going to resolve the ownership issue. However, I refuse to

say if we are going to be flexible or not on our stance,” he said.

Stuart Grobler, a senior general manager at Basa, confirmed that

the trade associations withdrew their statements last month.

“All the parties who were on the brink have withdrawn their

statements,” he said.

He said Gordhan and Trade and Industry Minister Rob Davies were

leading efforts on the political front to resolve the matter.

Grobler said the financial institutions were prepared to lose the

ownership points on their BEE scorecards, but make up ground on other legs of

empowerment such as access to banking and insurance products and facilities,

preferential procurement, corporate social investment, skills development and

employment equity.

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