GAMBLING: Casinos Commit To BEE
Recent Western Cape Business News
The members of the Casino Association of South Africa (CASA), which include all but two of the licensed casino operators in the country and who together represent some R194-billion in annual turnover, have confirmed their target of a BEE Level 4 rating by 2010. Individual companies within CASA have set programmes and protocols to achieve this.
CASA CEO Derek Auret said that BEE was consciously developed as one of the cornerstones of the licensing process when casino licence applications were first invited after the reconstruction of the SA gambling dispensation and the licences subsequently awarded. Applicants for casino licences were therefore required to place special emphasis on job creation and shareholding and funding in respect thereof, skills and enterprise development, corporate social investment, and related requirements. Provision was thus made for all facets of B-BBEE, which subsequently came to be entrenched in the B-BBEE Act and the Codes of Good Practice, in the casino licensing process.
“The casino industry was one of very few industry sectors in respect of which a meaningful framework was put in place for the promotion of black economic empowerment. The philosophy and objectives underpinning B-BBEE have been embraced by all casino operators and were taken up in conditions of licence when these were awarded. The conditions constitute binding and legally enforceable contracts between the relevant boards, as organs of state, and the casino operators. It is therefore a matter of record that the casino industry has been a pioneer in the development of this important policy that has now formally become part of South African economic reality.”
He said that to date, the casino industry has contributed significantly to B-BBEE by:
Creating value for BEE groups through shareholding structures and management participation;
Facilitating favourable repayment schedules for debt. In some instances shareholding was allocated at no cost;
Creating thousands of direct and indirect job opportunities;
Ensuring that, on average, more than 80% of all jobs created have been filled by previously disadvantaged individuals;
Contributing millions of rands to corporate social investment initiatives including the creation of broad-based community trusts; and,
Ensuring that skills development and succession planning are given the highest priority.
Immediately after the implementation of the Codes, the casino industry in June 2007, under the auspices of CASA, proactively commissioned Empowerdex to conduct an audit on the status of BEE in the industry. This was done despite the fact that it was not required by any regulatory authority. It is believed to have been the only exercise of this nature undertaken by any economic sector in South Africa. The purpose of the Empowerdex audit was to determine the status of B-BBEE in the industry and to identify possible shortcomings. Noteworthy results of the audit were the following:
Ø Nationally the casino industry achieved a Level 6 rating, with 46% of all voting rights in licensed casino operators being in the hands of black people
Ø The economic interest held by black people in licensed casino operators also amounted to 46%
Importantly, the audit revealed that the levels of performance attained in respect of aspects such as shareholding, voting rights and economic interest were already significantly in excess of the targets set in the Codes. According to a study commissioned by the Presidential Black Business Working Group in 2007, the “large-business sector” in South Africa achieved a Level 8 rating, a performance which is significantly lower than that of the casino industry.
Since the audit, the casino industry has embarked on a concerted strategy to fully align its B-BBEE initiatives and commitments with the requirements of the Codes of Good Practice. The membership of CASA has undertaken to undergo another full industry audit to verify this achievement by April 2011. CASA is certain that this will be a first for any industry in the country.
Said Auret: “The casino industry has demonstrably embraced the philosophies underpinning B-BBEE and, as a pioneer in this field, is proud of its achievements. It has already achieved many of the requirements which are now only being made applicable to other sectors of business. It has made it a priority to continuously improve the B-BBEE status of the sector as a whole which indicates clearly that it is serious about B-BBEE.”
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