JULY 2009 I ISSUE FIFTEEN I PAGE 1

July 2009 I Issue fif teen

It is this realisation that has spawned awave of corporate social responsibility

activities, business taking on a more humanface and investing in environmental andpeople bottom lines.

In South Africa it has been no different and,as business evolves, so do some of themajor industries such as gaming. Just overa decade and a half ago, prior toregulation, the casino industry was notdissimilar to the Wild West and its socialcontribution less than zero. Today, in aformal and regulated market, the gamingindustry has contributed significantly to theoverall empowerment and upliftment of our people.

Emerald Casino Resort has, during the pastdecade, focused on a broad based socialcontribution strategy with its epicentre inthe community that it serves. “Our policyhas always been to focus outward and intoour local communities,” says CEO MartinRice whose enthusiasm for the property'ssocial investment is infectious. “EmeraldCasino Resort has contributed to ourcommunity in various forms, fromsponsoring the local under-13 soccerleague through to rebuilding EbenezerHouse, a home for abandoned children inEvaton run by pensioner Edith Morake onless than R 400 a month.” Rice says thatcommunity based initiatives should be thecornerstone of corporate assistance. “Itmakes a difference to the lives of realpeople and engages every aspect of abusiness; from staff participation through totouching the lives of every member of the community.”

Rice says that beyond contributing to thecommunity, the property also encouragesenterprise development. “Emerald CasinoResort hosts a permanent craft market, afeature designed into the fabric of ourbusiness from the get-go, and a platformwhere entrepreneurs are able to showcaseand retail their goods.” He says that thiscorporate attitude to empowermentincorporates every aspect of policy. “BroadBased Black Economic Empowerment asnational policy fits with our vision ofempowering South Africans who have notenjoyed economic and social benefitsbefore,” says Rice, adding that theEmerald's procurement policies requirehigh contributor status levels from allsuppliers. “Presently our scorecard reflectsexcellent levels of engagement withempowered companies, but,” he says, “wecontinue to strive for greater achievementon this level.”

To this end the Emerald Casino Resort hasalso implemented extensive training andup-skilling programmes internally. “Wehave a wealth of talent in this country andwithin our business we believe indeveloping and nurturing skills, buildingnot only a stronger internal resource butproviding colleagues with opportunities toexcel within their own universe.”

Rice says that the Emerald Casino Resort'sholistic approach to empowerment andsocial responsibility - from communitybased initiatives through to internal skillsdevelopment and empowerment - isworking and paying handsome dividendsinternally and externally.

Until as recently as the

Eighties companies the world

over simply had one

objective, a single minded

focus on a net bottom line

that clouded every other

aspect of doing business. It

wasn't until the mid Nineties

when business started

looking at a different kind of

bottom line, at equities

outside markets and at the

environment and citizens

whose lives are affected by

the ebb and flow of living

in an increasingly

globalised world.

EMERALD CASINO RESORT'S HOLISTICAPPROACH TO EMPOWERMENT AND

SOCIAL RESPONSIBILITY

PAGE 2 I JULY 2009 I ISSUE F IFTEEN

The number of BBBEE deals beingconcluded has slowed markedly in the

last year, mostly because economicconditions make new deals expensive,while many of the older deals haveconsiderably impoverished newshareholders whose shares have lost asubstantial amount of value and therepayment of share purchases throughdividends alone has become problematic.There are, however, some signs that newdeals being devised are using otherfunding methods which make newshareholders less vulnerable, particularlyby using internal funding mechanisms.

The members of CASA, which include allbut two of the licensed casino operators inthe country, regard B-BBEE as an integralpart of their business philosophy, valuesand operational activities.

B-BBEE, and the philosophies underpinningit, are anything but new to the casinoindustry. They were consciously developedas one of the cornerstones of the licensingprocess when casino licence applicationswere invited and the licences subsequentlyawarded. Applicants for casino licenceswere therefore required to place specialemphasis on job creation and shareholding(and funding in this respect), skills andenterprise development, corporate socialinvestment, and related requirements.Provision was thus made for all facets of B-BBEE, which subsequently came to beentrenched in the B-BBEE Act and the

Codes of Good Practice, in the casinolicensing process.

The casino industry was one of very fewindustry sectors where a meaningfulframework was put in place for thepromotion of black economicempowerment. The philosophy andobjectives underpinning B-BBEE have beenwholeheartedly embraced by all casinooperators and were taken up in conditionsof licence when these were awarded. Theconditions constitute binding and legallyenforceable contracts between the relevantboards, as organs of state, and the casinooperators. It is therefore a matter of recordthat the casino industry has been a pioneerin the development of this important policythat has now formally become part of SouthAfrican economic reality.

More specifically, the casino industry hascontributed significantly to B-BBEE by:

• Creating value for BEE groups throughshareholding structures andmanagement participation;

• Facilitating favourable repaymentschedules for debt. In some instancesshareholding was allocated at no cost;

• Creating thousands of direct andindirect job opportunities;

• Ensuring that, on average, more than80% of all jobs created have been filledby previously disadvantagedindividuals;

• Contributing millions of rands to

corporate social investment initiativesincluding the creation of broad-basedcommunity trusts; and,

• Ensuring that skills development andsuccession planning are given thehighest priority.

The casino industry, as a further measure ofits serious commitment to B-BBEE has setitself a target to attain a Level 4 rating by2010 and individual companies, membersof CASA, have set protocols to achieve thisobjective. As a further indication of theprogressive implementation of this policy,the members of CASA have undertaken toundergo another full industry audit to verifythis achievement by no later than April2011. CASA is certain that this will be afirst for any industry in the country.

The casino industry has demonstrablyembraced the philosophies underpinning B-BBEE and, as a pioneer in this field, hasevery reason to be extremely proud of itsachievements. It has already achievedmany of the requirements which are nowonly being made applicable to othersectors of business. It has made it a priorityto continuously improve the B-BBEE status ofthe sector as a whole which indicatesclearly that it is serious about B-BBEE.

CE’S COLUMNB-BBEE INTEGRAL PART OF BUSINESS PHILOSOPHY

JULY 2009 I ISSUE FIFTEEN I PAGE 3

The AAA Babies' Haven caters for infantsfrom birth to the age of one year. “These

children come to us through Childline andChild Welfare,” says coordinator DebbieDevoy. “They often arrive malnourished andabused. Some even have foetal alcoholsyndrome and are in need of specialisedcare.”

“We asked AAA Baby Haven for a 'wishlist' of items that they needed,” says PeggyMokhatla, social equity manager at TheBoardwalk. “We then used R7000 collectedfrom The Boardwalk's dolphin fountainbetween January and March to purchasethese items.” The 'care package' includedbaby formula, nappies, blankets and foodproducts.

Miss South Africa, Tatum Keshwar made thehandover on 29 April 2009.

BABIES' HOME BENEFITS FROM THE BOARDWALK FOUNTAIN

In 2008 Virgil left the Golden HorseCasino and joined the Garden Route

Casino in Mossel Bay as the head ofInformation Technology.

“The Garden Route Casino offers me a lotof challenges. Working as a manager Inow see how individuals are measuredand would like to see people grow inconceptual capital, learn to become andwork with diversity, embracing it, to growin their personal and business lives.Working in a diverse team such as IT is

assisting in making steady progress ingetting individuals to bring out their best. “

“Being a manager is being a leader, oneable to motivate, inspire and encourage,finding gaps and closing them so that thebusiness is always ahead of the game. Inow know that I have the courage andstrength to lead my new team to greatheights and hopefully one day, one ofthem will be able to fill in my shoes whenit's time for me to move on to greenerpastures.“

Zenyano Masilela started her career as acleaner at Ridge Casino in 2003. She

always had a keen interest in the electronicand technical side of the casino industryand decided to start studying towards herN2 certificate, which she obtained in 2006.Zenyano was then offered a position in thetechnical department.

A year later she was made technical assistantand completed her studies obtaining her N4certificate in electronics. In December 2007Zenyano was promoted to slots technician, aposition she holds today.

From cleaner toslots technician

Virgil Michael's casino careerstarted at the Pietermaritzburg-based Golden Horse Casino in2001, where he started as aSecurity Officer, was soonpromoted to Junior IT Technician,then to Senior Technician andfinally to Golden Horses ITAdministrator. He is currentlyworking on a BSc InformationTechnology Management.

CASINO LIFE

It is widely acknowledged that thecasino sector of the gambling

industry in South Africa has, in manyrespects, played a pioneering role inthe concrete day-to-dayimplementation of B-BBEE in businessin this country. The significantsuccesses achieved to date have beenthe result of constructive cooperationbetween casino licensees andprovincial regulators, based on anacknowledgement that the policydecision to legalise gambling in SouthAfrica was largely driven by arecognition that the industry could actas a substantial catalyst for theachievement of the nationalgovernment's objectives in respect ofBlack Economic Empowerment(“BEE”).

The empowerment-related undertakingsmade by casino licensees preceded theissue of the Codes of Good Practice onB-BBEE (“the Codes”). The result wasthat although attention was given tothe promotion of BEE through theevaluation and licensing processes,different requirements in respect ofempowerment applied to differentcasino operators, depending upontheir original bid commitments and theparticular requirements of theprovincial regulators. In subsequentyears, the need for uniformity andconsistency of approach in respect ofBEE in the gambling industry becameincreasingly apparent.

It is important to note that provinciallegislation pertaining to gamblingempowers provincial regulators toimpose conditions on the licencesissued by them. Traditionally,

therefore, licence conditions becamethe key to the measurement andenforcement of compliance with BEE-related undertakings.

Subsequent to this, in February 2007,the Codes were issued, in terms of theBroad-based Black EconomicEmpowerment Act, Act 53 of 2003(“the Act”). These were latersupplemented, also during 2007, byan Interpretive Guide to the Codesissued by the Department of Trade andIndustry (“the Guide”). In stressing theneed for uniformity of approachtowards B-BBEE, the Guide stipulatesthat the Codes “provide a standardframework for the measurement ofbroad-based BEE across all sectors ofthe economy. This means that noindustry will be disadvantaged overanother when presenting their BEEcredentials”. It further stipulates thatthe Codes are intended “to level theplaying field for all entities operatingwithin the South African economy byproviding clear and comprehensivecriteria for the measurement of broad-based BEE”.

Against the backdrop of this palpablequest for uniformity, there is thepotential for an interesting legalconundrum in the context of B-BBEE inthe gambling industry. The holder of acasino licence may find itself requiredby conditions imposed on its licenceby a regulator, to attain, for example,a Level 4 B-BBEE status within a certainperiod, but also simultaneously toimplement B-BBEE-related initiativesover and above the requirements setforth in the Codes. Examples mightinclude a requirement imposed by theregulator that all the licensee'sexpenditure on preferentialprocurement should be incurred withlocal BEE suppliers, or that itsexpenditure on enterprisedevelopment would be recognised on

a basis other than theformula (3% of NPAT)contained in the Codes.

Regulatory requirements inthe context of B-BBEE whichdiffer from the performanceindicators in the Codes can beexpected to pose their own uniquechallenges. These would arise, in thefirst instance, in the context ofprocuring a rating from an accreditedB-BBEE verification agency. A ratingagency must, by law, apply theformulas set forth in the Codes to ratea measured enterprise. Therefore, suchan agency will not, in performing arating, have regard to compliancewith additional requirements whichmay have been imposed by theregulator. It will not have regard, forexample, to the extent to whichprocurement expenditure has beenincurred with local BEE suppliers, butwill merely focus on the extent to whichthe suppliers in question arethemselves B-BBEE compliant.Similarly, expenditure on enterprisedevelopment will be rated solely onthe extent to which it approximates thetarget of 3% of NPAT. Accordingly, onthe basis of compliance with therequirements of the Codes, a casinolicensee may be issued with a Level 4Contributor status, irrespective ofwhether it has complied with theadditional B-BBEE requirements of theregulator. In such a case, where thecasino licensee has failed to meetthese further requirements, thequestion which arises is whether thepossible suspension, or even therevocation of the licence, on the basisof non-compliance with its conditions,would be a legally appropriateresponse?

In considering this, it is important totake into account that section 10(a) of

PAGE 4 I JULY 2009 I ISSUE F IFTEEN

B-BBEE -CRACKINGTHE CODES?

l egalWATCHl e g a l W A T C H

continued on page three

JULY 2009 I ISSUE FIFTEEN I PAGE 5

the Act places a positive obligation onpublic entities, such as regulatoryauthorities, to “take into account and,as far as is reasonably possible, applyany relevant code of good practiceissued in terms of this Act indetermining qualification criteria forthe issuing of licences, concessions orother authorisations in terms of anylaw”. The impression created by this isthat regulators are bound by the termsof the Codes, unless adherence to

them is not reasonably possible.Against this backdrop, the legalimplications of a departure from theterms of the Codes may merit closerinspection.

Inasmuch as the imposition byregulators of additional BEE-relatedlicence conditions, over and above therequirements of the Codes, has thepotential firstly to undermine theuniformity which the history of the

industry to date has demonstrated ismuch needed, and which the Codeshave been designed to create andsecondly may provide scope forunequal treatment, as betweendifferent licensees on the one hand,and as between the gambling sectorand other sectors of the economy onthe other, thought will have to be givento the best route towards theachievement of B-BBEE-relatedobjectives within the industry.

continued from page two

Boardwalk gives R10 000 for CANSA

The Boardwalk donated R10 000 to theEastern Cape Cancer Association on

Wednesday, 29 April. Miss South Africa,Tatum Keshwar took time out of her busyschedule promoting the World Series ofSlots tournament to hand over the cheque.

The funds were collected during TheBoardwalk Shavathon on 03 April thisyear. According to Peggy Mokhatla, socialequity manager at The Boardwalk, R4 200was raised on the day and The Boardwalkthen more than doubled the amount to endup with a grand total of R10 000.

“This is a very worthy cause and itdeserves a generous donation,” saysMokhatla. “It is also something very closeto our hearts because the wife of our GMrecently passed away from this disease.”

L-R: Joan Duarte of CANSA P.E., Miss SA Tatum Keshwar, Boardwalk Social Equity Manager, Peggy Mokhatla, Boardwalk Operations Manager Gordon Mbovane

PAGE 6 I JULY 2009 I ISSUE F IFTEEN

MACK'S SHOPGodfrey Mack was employed in the securitydepartment at Mykonos Casino, havingstarted out as a security supervisor andworking his way through the ranks tosecurity shift manager. During hisemployment Godfrey noted the lack of aproper, affordable staff canteen that couldoffer staff a wider variety of food andsnacks at an inexpensive price.

Resigning from his position, Godfrey laterreturned to establish what is affectionatelyknown today as “Mack's Shop”. Drawingon his knowledge and experience gainedduring his time with the company he wasable to meet a need within the casino thatwas easy on the pocket.

In February 2005 Paul Steenkamp startedhis career as a security officer at MykonosCasino. Two years on he applied for theposition of slots technician, and in 2008successfully completed his Level 4Electronics Course. With the assistance ofthe training co-ordinator, he applied for andreceived study assistance in order tocomplete a short course in electronicinstallations. “Through the company'senterprise development initiatives, casinostaff and the community are afforded theopportunity to realise their dreams, and forthis I am truly grateful”.

Sisters and Singers! Kerishnie Naicker andher sister Saloshni Narandas; actress JanaStrydom and sister Anju Strydom withSOLOuette singers Glenn Fransman,Candida (Candy) Mesoma, Ruth Brown andStephan Nel.

ON THURSDAY THE 7THOF MAY, THE SOLOUETTEVIP AND MEDIA LAUNCHNIGHT TOOK PLACE ATTHE ODEON SHOW BARAT EMPERORS PALACE.

MAKINGDREAMSCOME TRUE

JULY 2009 I ISSUE FIFTEEN I PAGE 7

Following a collaborative process,General Manager Mike Page invited

business proposals. “The choices were tosell the vehicles or to use them to givesomething back to the community.”Hemingways has a very active CSIprogramme, but a venture of this naturerequired a different level of commitment.“Enterprise Development requires muchmore hands-on responsibility. There is somuch that can go wrong: to be successfulit needs active mentorship,” says Mike.This is an important initiative as part ofthe ECGBB license bid in East Londonwas based on the initiation of anEnterprise Development Fund byHemingways.

Norman Xhosana, a manager atHemingways, proposed a tourism shuttleservice, a business that would dovetailwith Hemingways' core offerings. It wasa perfect opportunity. It would allowNorman to make the most of the clientelehe knew best, having spent 20 years inthe leisure industry, and allowHemingways to actively support andmentor the new business. Norman'sShuttles opened for business inNovember 2008, and has been growingfrom strength to strength, despiteeconomic conditions and personal crisis.

Norman's Shuttles supplies airporttransfers to all the hotels in East London,stretching as far as Mpekweni and FishRiver Sun. Norman has especially goodrelations with Hemingways, GardenCourt, The Blue Lagoon, Mpekweni andFish River Sun.

Hemingways has gone out of their way toensure the success of the business, fromproviding vehicles, financing assistance,an office at the casino complete with emailand fax facilities, and instant access toguests requiring this service. Even thechoice of branding the shuttles withHemingways livery was deliberate. “Wewanted to give the service all our support,including the credibility attached to ourwell-known brand,” says Mike Page.

However, some things have provedbeyond Hemingways' control. Recentlywhen Norman investigated loud noisesoutside his home he was shot in thestomach and had to spend some weeks inhospital. But his caring staff continuedbuilding the business in his absence,confident that he would soon return. Todayhe is back in the driver's seat - even with abullet still somewhere in his stomach!

Success is all about caring and excellentservice. “I really do what I can for my

guests,” says Norman, “because word ofmouth is the best reference. I once drovea visitor from a large out of townorganisation and he was so happy withthe service his recommendation meansthat all staff visiting East London must nowuse my service.”

The success of the business has justifiedHemingways' faith in Norman Xhosana.Hemingways has indicated that they arewilling to support Norman should hedecide to expand this business bybranching into the tourism industry. “Myvision is to offer a shuttle service in EastLondon that caters also for VIP guests byoffering flashy cars like they do in Jo'burgand Cape Town, but with friendlyEastern Cape drivers,” says Norman.

Norman has a CSI plan of his own. Forthe Garden Court's recent Soccer Day,Norman provided transport for players.“It is all about giving back. In fact,Norman's Shuttles has created jobs forthree drivers who would otherwise not beemployed today,” says Norman.

“The entrepreneurial spirit is what theEastern Cape is all about” says MikePage, “and we are very excited to beable to nurture this spirit and give back tothe community.”

In the driver’s seatwith Hemingways In the driver’s seatwith Hemingways

Social responsibility is a driven agenda at Hemingways

Casino and Hotel. When three minivan shuttles had served

their purpose of ferrying guests between the temporary

parking and the hotel complex, Hemingways decided to

turn the vehicles into a BBBEE opportunity. The only catch

was: what business opportunity?

20th Floor, 1 Thibault Square, Cape Town, 8001 • Tel: +2721 409 2460 • Fax: +2721 419 7271PAGE 8 I JULY 2009 I ISSUE F IFTEEN

We bet on BEE

and came out tops.

Since 1996, the casino industry has been responsible for more than R12-billion in new development,

created almost 100 000 direct and indirect new jobs, andhas invested heavily in public infrastructure and tourism plant, including two international convention centres, over 5 000new hotel rooms, as well as other tourism assets.

Importantly, B-BBEE and the philosophies underpinning it were consciously developed as one of the cornerstones of the licensing process when casino licence applications were invited and the licences subsequently awarded.

Since then, the casino industry has considerablyadvanced transformation, creating a new order in the management and ownership of assets in our tourism and leisure industry and has set itself a target to attain a Level 4 rating by 2010.

Individual companies – members of CASA – have putprogrammes and protocols in place to achieve this, and have it independently verified by April 2011. We are certain thatthis will be a first for any industry in the country.

Over the years since the new gambling dispensationcame into being , we have created value for BEE groups through shareholder structures and management participation, facilitated favourable repayment schemes for debt, created thousands of direct and indirect job opportunities, ensured that on average 80% of all jobs created are filled by the previously disadvantaged, contributed millions of rands to

corporate social investment initiatives and broad-based community trusts and ensured that skills

development and succession planning are given the highest priority.

Casino Association of South Africa | 20th Floor, 1 Thibault Square, Cape Town, 8001 | Tel: +27 21 409 2460 Fax: +27 21 419 7271