Identifier
Created
Classification
Origin
05PRETORIA425
2005-01-31 15:28:00
CONFIDENTIAL
Embassy Pretoria
Cable title:  

DTI OFFICIAL DISCUSSES MNC EQUITY OWNERSHIP

Tags:  EINV ETRD ECIN ECON SF EFIN 
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This record is a partial extract of the original cable. The full text of the original cable is not available.
C O N F I D E N T I A L PRETORIA 000425 

SIPDIS

DEPT FOR AF/EPS AND AF/S/TCRAIG AND KGAITHER
COMMERCE FOR 4510/ITA/IEP/ANEWSA/OA/JDIEMOND
TREASURY FOR BRESNICK, LSTURM, AND AJEWELL
DEPT PASS USTR FOR PCOLEMAN, WJACKSON AND CHAMILTION

E.O. 12958: DECL: 01/30/2010
TAGS: EINV ETRD ECIN ECON SF FEFIN
SUBJECT: DTI OFFICIAL DISCUSSES MNC EQUITY OWNERSHIP
STATEMENT


Classified By: Minister Counselor Jeff Hartley. Reason 1.4 (b,d).

C O N F I D E N T I A L PRETORIA 000425

SIPDIS

DEPT FOR AF/EPS AND AF/S/TCRAIG AND KGAITHER
COMMERCE FOR 4510/ITA/IEP/ANEWSA/OA/JDIEMOND
TREASURY FOR BRESNICK, LSTURM, AND AJEWELL
DEPT PASS USTR FOR PCOLEMAN, WJACKSON AND CHAMILTION

E.O. 12958: DECL: 01/30/2010
TAGS: EINV ETRD ECIN ECON SF FEFIN
SUBJECT: DTI OFFICIAL DISCUSSES MNC EQUITY OWNERSHIP
STATEMENT


Classified By: Minister Counselor Jeff Hartley. Reason 1.4 (b,d).


1. (C) Department of Trade and Industry (DTI) Director of
Black Economic Empowerment Jeffrey Ndumo explained to Econoff
in a January 26 meeting that an imminent Statement on
Ownership for Multinationals would not provide a blanket
exemption to black economic empowerment equity requirements
for foreign companies operating in South Africa. However, he
said that exemption mechanisms such as that developed by the
information communications and technology (ICT) industry
would be acceptable.


2. (C) He said that while the DTI does not strongly favor
equity equivalents - where companies could overscore in one
area to compensate for deficiencies in another - the
Statement would elaborate on the appropriate use of such a
mechanism and what might qualify as acceptable equity
equivalents.


2. (C) He said that the Statement would likely abolish the
practice of differentiating between direct and indirect
ownership as they have been distinguished in the Financial
Services Charter. This would require that the Financial
Services industry redraft that ownership section in its
Charter, resulting in greater pressure on foreign banks to
satisfy this scorecard component through the Financial
Services equity equivalent of financing black economic
empowerment (BEE) transactions.


3. (C) Ndumo praised the work of Dali Mpofu, Chairman of
the information communications and technology (ICT) Charter
Working Group. He said that the DTI had learned a great deal
from Mpofu's strategy, particularly in the way he engaged
with various stakeholders (including multinational
companies). Local Managing Directors of U.S. ICT companies
operating in South Africa, however, have criticized Mpofu for
the manner in which he restricted their interaction to the
issue of equity ownership while avoiding engagement on other
topics.
FRAZER