Hall of Shame and Fame

(David vs Goliath)

This month we have identified three inductees into the hall of shame, though one is headed for the hall of fame.

FNB recently has told its suppliers that “we require a certificate from an accredited agency.”

We regretfully had to go on the offensive and explain to FNB that there were no “accredited agencies”, that they were not following good corporate governance in this issue, and that they were operating contrary to the spirit of the Broad Based Black Economic Empowerment Codes of Good Practice and dti policy.

To their credit FNB has changed their requirements: ”to ask the supplier to provide independent verification/supporting documentation of the criteria upon which the rating is based, which we would view as good corporate governance.”

This is more than good corporate governance. It is an absolute requirement of the Codes of Good Practice. Unless you can provide suitable evidence or documentation you cannot earn any points. It is good news that FNB are now going to insist on your providing them with evidence, rather than disregarding your scorecard entirely.

So they could be moved from Hall of Shame to Hall of Fame as we don’t hold grudges against their indiscretions of the past.

This particular episode felt more like the ant vs the elephant rather than David against Goliath. How does one man fight the might of one of our biggest banks? If you supply FNB and they reject your scorecard and evidence, please forward me those responses.

If you do not gather the evidence or documentation, you should be using EconoLog, the BEE documentation system.

The next Hall of shamer is one of my favourite companies of all time. Pick n Pay has told its suppliers that they will only accept a certificate produced by a company that has applied to SANAS to become accredited and do not accept self-rating. Suzanne Ackerman, a director of Pick n Pay has stated “we at PnP have taken the decision to not accept self assessment certificates - sadly, this is from several unfortunate experiences, as certain companies were over-inflating their scores dramatically.”

I would be quite keen to know which suppliers have been found guilty of this practice. I’d be interested to know if Pick n Pay have taken action against those companies (they will be guilty of fronting and fraud – a criminal offense). Since I purchase my groceries from Pick n Pay, I’d be interested in knowing which products are affected, as I reasonably consider that if a company commits fraud, it’s own products and quality could also be suspect. Are we safe purchasing groceries from Pick n Pay, some of whose suppliers are committing fraud against their customer?

One of Pick n Pay’s biggest suppliers is one that has recently been fined over R140 million – by the Competition Commission for price fixing of bread and pharmaceuticals – Tiger Brands. Notwithstanding their offense, Pick n Pay continues to purchase billions of rands of goods from them without bullying them!

Tiger Brands itself joins as our last hall of shamer. They also demand that their suppliers only supply a certificate produced by an about to be accredited agency. They have gone as far as to recommend the name of a company to use – being the same one who has given them their own certificate. Conflict of interest? After being fined R140 million one would expect better corporate governance and a better knowledge of the B-BBEE Codes of Good Practice.

Disgracefully their BEE score is only level 8. Even worse since when we looked at their scorecard it contains this disclaimer: ”This certificate is the result of an independent and impartial verification of the BBBEE status of the measured entity measured against the Codes of Good Practice on Broad Based Black Economic Empowerment. The objective of our verification is to verify the validity and accuracy of the BBBEE status represented by the measured entity. EmpowerLogic is not responsible for ensuring completeness of information provided to support the BBBEE status”.

Let me repeat that last line: “EmpowerLogic is not responsible for ensuring completeness of information provided to support the BBBEE status”.

Now, let us look back at FNB’s new requirements, which is in line with the codes.

Paragraph 2.6 states: Any representation made by an entity about its broad-based black economic empowerment compliance must be supported by suitable evidence or documentation.  An entity that does not provide evidence or documentation supporting any initiative, must not receive any recognition for that initiative.

I wonder if the EmpowerLogic disclaimer does not invalidate all scorecards, unless supporting documentation is supplied together with the certificate? The disclaimer specifically says that they are not responsible for ensuring completeness of information to support the BBBEE status. However the codes state that an entity that does not provide evidence or documentation supporting any initiative, must not receive any recognition for that initiative. Therefore Tiger Brands poor score of level 8 must be reduced to a score of zero, making them a non-compliant BEE contributor, until they supply suitable evidence and documentation. This disclaimer appears on all scorecards I have seen that EmpowerLogic has put its name to.

This means that when you request a scorecard, you must request that the company supplies you with suitable evidence or documentation. A scorecard on its own is not acceptable evidence, even if signed by a not-yet accredited agency.

If you can provide me with further evidence of companies rejecting your scorecard outright without even asking for evidence, I shall be grateful. I’d like to help put all those companies back into the hall of fame.

A bouquet and membership of the Hall of Fame goes to Metrocash – a large wholesaler. They have asked their suppliers for a scorecard, either self rating of independent or about to be accredited.

Conclusion: As companies are slowly beginning to recognise that the scorecard is not as important as collecting and retaining evidence and documentation. Our “10 Step Process” and “EconoLog ” has been saying that for the past 6 months!