South Africa’s department of trade and industry said last week that it was concerned the Employee Share Ownership Scheme (Esop), proposed under Sasol’s R17,9-billion BEE deal, “falls short of the level of empowerment envisioned in the codes”.
“The BEE Act and its accom-panying Codes of Good Practice were specifically intended for the benefit of black South African citizens,” the department said.
“This therefore means that when reviewing a BEE transaction of this nature, recognition will be given only to the extent that black South Africans benefit from the transaction,” it said.
The department said that in the case of the Sasol transaction, the 4% allocation for an Esop will be shared among permanent residents, as well as white employees.
“It is therefore not clear what the effective allocation will be to black South African employees,” it said.
South Africa’s third-largest company, Sasol, announced last week its plans to transfer 10% of its issued share capital to black investors by 2008.
In the largest BEE deal announced to date Sasol said the largest portion of the stake had been set aside for employees.
In terms of its announcement 4% of the shares worth more than R7-billion had been allocated to an Esop that would benefit more than 27 000 of its employees.
Of the remaining shares 3% would be offered to the broader black public, possibly through a retail offer, while 1,5% would go to black partners and another 1,5% would be put into a still-to-be-established Sasol Foundation, which will contribute to growing South Africa’s skills, particularly in science and technology.
According to Sasol’s BEE announcement, only employees with permanent South African residence and those below managerial level would stand to benefit.
However, it said 3,7% of the 4% would go to South African employees, which comprise 60% black and 40% white employees.
The other 0,3% would be allocated to black managers and black non-executive directors.
This means 92,5% of the shares worth an estimated R6,5-billion would go to local employees and 64,9% of that amount would go to black employees.
That means shares worth roughly R4,2-billionshould end up in the hands of black employees with a further R525-million going to black management and non-executives.
The trade and industry department said Sasol was one of the largest South African multinationals, with mining and energy operations across all continents, and also the largest industrial investor in the South African economy.
“In the department’s view it is only appropriate that such a company should be one of the champions of BEE and other forms of transformation in the economy,” it said.
It acknowledged that the transaction otherwise appeared to be broad-based in nature and would include the participation of black women, cooperatives, black suppliers and customers, black youth and it would help with the facilitation of new entrants into the industry.
“The involvement of the Sasol Foundation, which seeks to produce critical skills in engineering, science and technology, is also exciting and indicates that the company has adopted a long-term view to empowerment.
“In these aspects we believe that Sasol’s proposed BEE deal is broadly in line with government’s Codes of Good Practice for broad-based BEE,” the department said.
Since the market was still awaiting the finalised details of the transaction, which Sasol expected to be ready in 2008, the department said it “trusts that this and any other flaw in the transaction will be ironed out, so that the deal, in its final formulation, fully embraces all the aspects of empowerment set out in the Codes”. — I-Net Bridge