Abstracts

24 state capture under Zuma’s administration (Chipkin et al., 2018). State capture occurs when public policy is heavily influenced by private interests. Despite the progress made in BBBEE policy and reporting mechanisms, instances of fronting and falsified certificates continue to poison the South African economy and empowerment framework. As recently as September of 2019, investigations uncovered fraudulent BEE certificates in deals involving South Africa’s state-owned electricity provider Eskom and the notoriously corrupt Gupta brothers (Head, 2019). (See article by Petros in this volume for discussion of Eskom.) These revelations not only tarnish the BEE agenda but also indict the consulting agencies entrusted with implementing and approving BBBEE compliance. Moving forward, the governance of BBBEE must be improved so that it is not used as an instrument of corruption, but rather as a means to influence the economic transformation it was designed to elicit. The Mining Industry The mining industry is a revealing case study with respect to corporate governance transgressions and the damage they cause. Over the past decade and a half, the mining industry has experienced slow improvement in terms of redressing socioeconomic inequality. According to Professor of Management Adèle Thomas, this poor performance can be attributed to three general categories of transgressions: 1) political influence, nepotism, and fronting; 2) fraud and controversial deals; and 3) mismanagement and negligence. Political influence, nepotism, and fronting involve practices such as “tenderpreneurship” in which government tender opportunities are awarded to those who are politically connected. The mining industry has also suffered from the infiltration of foreigners exploiting empowerment deals to pocket profits from the developing economy. The restructuring of ownership entailed within the BBBEE process has made the mining industry susceptible to debt risk and has propagated an extreme wage gap between workers and management (Thomas, 2015). In response to this corruption and the industry’s unwillingness to transform itself, the South African government conducted multiple assessments of the industry in 2004, 2010, 2014, and 2018. During 2014, the assessment demonstrated a lack of compliance and eagerness to transform the industry, poor living conditions and poverty in mining communities, and low levels of meaningful participation by nonwhite South Africans in the value chain of the mining industry. By way of response to these abuses, the government introduced a new “Broad-Based Socio- economic Empowerment Charter for the Mining and Minerals Industry” (Department of Mineral Resources, 2018). This revision aims to further clarify regulations and definitions to increase adherence to legislation and yield transformation. The continual abuse of BBBEE policies has warranted a call for a change in governance. Despite the efforts of the DTI, the BBBEE Commission, and other agencies, high- powered business leaders, politically connected people, and verification agencies have managed to tarnish the goals for equality through their systemic collusion and corruption. The current state of policy has allowed for detrimental loopholes that undermine the intended increase in black empowerment. The goal for transformation is also inhibited by the challenges within South Africa’s education system. Education The management control scorecard within the Codes of Good Practice indicates compliance targets for levels of black employees holding management positions. The compliance targets are 50%, 60%, 75%, and 88% respectively for executive, senior, middle, and junior management positions held by black employees (RSA, 2013). Consequently, BBBEE’s goal of transferring economic and financial power to the black population requires a population of black South Africans adequately educated to fill such positions. According to the South African government, 68.7% of black South Africans have attained secondary education, but only 9.1% of black South Africans have attained postsecondary education; comparatively, 38.3% of white South Africans have attained postsecondary