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CASINOS IN SOUTH AFRICA: LEADERS IN BROAD-BASED BLACK ECONOMIC EMPOWERMENT

CASA Announces its commitment to become fully BEE

Cape Town, 26 March 2009 - The members of the Casino Association of South Africa (CASA), which include all but two of the licensed casino operators in the country, regard B-BBEE as an integral part of their business philosophy, values and operational activities.

B-BBEE, and the philosophies underpinning it, are anything but new to the casino industry. They were, in fact, consciously developed as one of the cornerstones of the licensing process when casino licence applications were invited 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 wholeheartedly 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.

More specifically, 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.

CASA welcomes the fact that the Codes of Good Practice have now been formalised and that it provides a measurable and clear indication of what is expected by all economic sectors. Immediately after the implementation of the Codes, the casino industry, as early as June 2007, under the auspices of CASA, proactively commissioned Empowerdex (who has since received a SANAS Certificate and Schedule of Accreditation) to conduct an audit regarding the status of black economic empowerment in the industry. This was done at considerable expense and 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, signifying the importance that the casino industry attaches to the matter.

The purpose of the Empowerdex audit was twofold: firstly to determine the status of B-BBEE in the industry and secondly to identify possible shortcomings with a view to the implementation of strategies to overcome these. Noteworthy results of the audit were the following:

On a National level 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.
The economic interest held by black people in licensed casino operators also amounted to 46%

What is important to note is that 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. The casino industry is proud of the progress that has been made in measurably practising and continuously implementing the industry’s commitment towards B-BBEE.

Despite the achievements of the industry in respect of B-BBEE in general, the audit conducted by Empowerdex has highlighted which aspects of the Codes require further focus. In this regard, the guidelines provided regarding proper and accurate record-keeping will greatly assist in confirming the achievements of the casino industry. Considerable progress has already been made in this regard.

The Verification Manual recently released by the Department of Trade and Industry will also contribute towards creating certainty by emphasising the audit methodology to be followed and related matters. Since the audit, the casino industry has embarked upon a concerted strategy to fully align its B-BBEE initiatives and commitments with the requirements of the Codes of Good Practice.

The casino industry, as a further measure of its serious commitment to B-BBEE has set itself a target to attain a Level 4 rating by 2010 and individual companies, members of CASA, have set in train programmes and protocols to achieve this objective. Moreover, as a further indication of the progressive implementation of this policy, the members of CASA have undertaken to undergo another full industry audit to verify this achievement by no later than April 2011. CASA is certain that this will be a first for any industry in the country.

The casino industry has demonstrably embraced the philosophies underpinning B-BBEE and, as a pioneer in this field, is extremely proud of its achievements in this regard. 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.