VZCZCXRO2872
PP RUEHDU RUEHJO
DE RUEHSA #4856/01 3461446
ZNR UUUUU ZZH
P 121446Z DEC 05
FM AMEMBASSY PRETORIA
TO RUEHC/SECSTATE WASHDC PRIORITY 0448
INFO RUEATRS/DEPT OF TREASURY WASHDC
RUCPDC/DEPT OF COMMERCE WASHDC
RUEHJO/AMCONSUL JOHANNESBURG 3581
RUEHDU/AMCONSUL DURBAN 7272
RUEHTN/AMCONSUL CAPE TOWN 2145

UNCLAS SECTION 01 OF 02 PRETORIA 004856 
 
SIPDIS 
 
DEPT FOR AF/S; AF/EPS; EB/TPP/MTA 
USDOC FOR 4510/ITA/IEP/ANESA/OA/JDIEMOND 
DEPT PASS USTR FOR PCOLEMAN, FLISER AND WJACKSON 
TREASURY FOR BCUSHMAN 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: EINV ETRD EFIN ECON USTR SF
SUBJECT: SOUTH AFRICA: BEE CODES OF GOOD PRACTICE 
         CODE 200: MANAGEMENT 
 
REF: (A) PRETORIA 4854 
 
     (B) PRETORIA 4855 
 
¶1. (U) Summary.  On November 1, the Department of Trade 
and Industry released the final version of the Broad- 
based Black Economic Empowerment (BEE) Code on Management 
and Control, i.e., Code 200.  One of ten codes, Code 200 
sets forth the criteria and methodology for scoring a 
firm's contribution to BEE objectives in the management 
of an entity.  This portion of the BEE Generic Scorecard 
accounts for 10% of a firm's total score.  In each 
instance, the actual number of points awarded is 
calculated by multiplying the fraction of a compliance 
target (there are seven) achieved by the number of 
possible points allotted for each BEE target.  No excess 
scoring for exceeding any of the BEE targets is possible. 
However, a full point may be earned for meeting a bonus 
target.  End Summary. 
 
¶2. (U) This is the third in a series of cables reporting 
on the final criteria and methodology for scoring BEE 
contribution, as embodied in the government's BEE Codes 
of Good Practice.  After nine months of consultations, 
the Department of Trade and Industry released its final 
version of the Broad-based Black Economic Empowerment 
(BEE) Code on Management and Control (Code 200) on 
November 1.  The stated goal of Code 200 is to provide an 
incentive for installment blacks on the board of 
directors, as senior managers, and as top managers.  All 
BEE Codes of Good Practice, including this one, may be 
found at the following Internet website: 
 
   http://www.dti.gov.za/bee/CODESOFGOODPRACTICE 2005.htm 
 
The Management Score 
-------------------- 
 
¶3. (U) The portion of the BEE generic scorecard covered 
by Code 200 accounts for 10% of a firm's total score. 
Firms may earn a bonus of one percentage point for taking 
on independent non-executive board members.  For a 
complete understanding as to how this portion of the 
generic scorecard factors into the rest of the scorecard, 
please refer to ref A. 
 
¶4. (U) The management section of the BEE generic score 
card is divided into two parts: BEE participation on the 
board of directors, and BEE participation in management. 
When it comes to participation on the board, a maximum of 
three percentage points is awarded if 50% of the voting 
rights are in black hands.  A maximum of one point is 
awarded if 50% of executive board members are black.  A 
maximum of one point is awarded if 25% of board members 
are black women. 
 
¶5. (U) When it comes to participation in management, a 
maximum of two points is awarded if 40% of senior 
management (defined as those who have responsibility for 
the overall direction of the entity) are black.  One 
point is awarded if 20% of senior management are black 
women.  One point is awarded if 40% of top management 
(defined as those who have responsibility for a portion 
of the entity's activities) are black.  Another point is 
awarded if 20% of top management is black women.  A full 
bonus point may be awarded if 40% of the independent non- 
executive board members are black. 
 
¶6. (U) The following table spells out the maximum 
possible points and BEE targets to be achieved for 
deriving a score under the management and control section 
of the BEE generic scorecard: 
 
                                               BEE 
Criteria                             Points    Target 
--------                             ------    ------ 
 
Board Member Voting Rights:            3        50% 
    Black people                       1        50% 
    Black women                        1        25% 
 
Management: 
    Senior Top Management: 
         Black People                  2        40% 
 
PRETORIA 00004856  002 OF 002 
 
 
         Black Women                   1        20% 
    Other Top Management: 
         Black people                  1        40% 
         Black women                   1        20% 
 
Bonus: 
    Independent Non-executive          1        40% 
    Black Board Members 
 
Scoring 
------- 
 
¶7. (U) In each case, the actual number of points awarded 
is calculated by multiplying the fraction of the 
compliance target achieved by the number of possible 
points in each category.  For example, if 25% of the 
voting rights of a firm are in black hands, then 25% is 
divided by the compliance target of 50% and, instead of 
scoring the maximum three points, the firm scores only 
1.5 points for that category.  Anything over 50% still 
results in a maximum of 3 points.  For example, if blacks 
hold 75% of the voting rights of a firm, the firm would 
still only score 3 points as opposed to 4.5 points for 
that category. 
 
Definitions 
----------- 
 
¶8. (U) Black is defined as black (i.e., African), 
"coloured," and Indian South Africa citizens (or those 
who could have applied for South African citizenship, if 
permitted) who suffered discrimination under the 
apartheid regime and their descendents. 
 
¶9. (U) According to Code 200 a "senior top manager" is a 
person in a key financial and overall management position 
such as a Chief Executive Officer, Chief Operating 
officer, or Chief Financial Officer.  The term "other top 
manager" denotes a person who is actively involved in the 
development and/or implementation of the firm's strategy 
in their particular area of responsibility, such as a 
Human Resource Director or Marketing Director.  Any 
employee classified under the management control segment 
of the generic scorecard cannot also be counted under 
employment equity segment on the generic scorecard (also 
worth 10 points) and vice versa.  The draft Code of Good 
Practice on Employment Equity (Code 300, whose goal is to 
encourage an equitable representation of blacks in all 
occupations and organizations) is scheduled to be 
released for comment in December of 2005. 
 
TEITELBAUM