Finance Minister Trevor Manuel has set the cat among the pigeons with his remarks that the government’s black empowerment policy was flawed and needed reviewing.

Speaking to the Financial Times at the weekend, Manuel said the legislation, passed four years ago, was being abused.

He said: “There were all kinds of things that businesses have done, good and bad, cynical and genuine.”

Manuel said some companies were merely electing black people as tokens and cited a story of his friend saying: “They (his white partners) say, ‘We want you there. You are a good man. But actually we do not need you close to what we do. We will run the business, but we have bought an insurance policy through you’.”

Colin Reddy, director of research company BusinessMap Foundation, said he was surprised Manuel had aired such views to the media.

Reddy said it was big corporations that had control of how empowerment was implemented and redesigning the black empowerment policy would not achieve much.

Empowerment rating agency EmpowerdDex said Manuel’s comments were mainly related to the ownership and management portion of the empowerment scorecard. These two elements had traditionally been referred to as narrow-based empowerment and they benefited the fewest black people, it said.

“We believe that there is no need to review the policies yet as the codes were gazetted only this year, and only through implementation by the companies will we know what works and what doesn’t. The codes themselves cater for this as the trade and industry minister can review them on an ongoing basis. To say they do not work at this time would be a bit premature,” EmpowerDex said in a statement.

President Thabo Mbeki’s brother, Moeletsi Mbeki, also told Metro FM yesterday that nothing would come out of Manuel’s call for black economic empowerment to be reviewed, and dismissed it as just talk.

Reddy said Manuel’s statement was actually questioning the degree of control policy makers had in a free market system.

“In a capitalist environment, it is unavoidable to have a concentration of ownership in the hands of a few individuals who have money,” said Reddy.

He said the government could not assume direct control of the implementation of empowerment and still have a free economy.

“Unless the government wants to move towards socialism, I don’t see policy makers having more control. Also, if the government is seen to be interfering in business, that would scare off foreign direct investment. It is a catch 22 situation,” said Reddy.

Independent analyst Siyabonga Mahlangu said there might be flaws in the implementation of BEE, but these would be corrected along the way. “Empowerment is an ongoing process, and the policy is fairly young. The minister is calling for checks and balances, but these will be put in place as we move along,” said Mahlangu.

He said empowerment should be viewed holistically and not merely as equity stakes in big companies.

Stephan van der Walt, analyst at financial systems company Bravura, said the abuse of the BEE system was partly due to pressure on firms to comply. “I would like to see more broad-based empowerment transactions that do not involve the usual suspects,” said Van der Walt.

Abdul Milazi, businessday.co.za