"This was like a Codesa," says Jacko Maree, CEO of Standard Bank.
Unlike SA's political settlement, the financial services charter may not have been four years in the making. But the 10 months it took to develop the landmark deal contained as much furious lobbying, heated argument, aggressive posturing and soul-searching as the Kempton Park talks.
The result is a deal that is supported by all 11 key industry bodies and which will set in motion a revamp of the most critical economic sector in the economy: the financial services industry, comprising banks, life assurers, short-term insurers and asset managers.
It has been rightly described as "the mother of all charters" by the Black Business Council. It comes after a year of almost daily discussion between various interest groups - discussions that were often emotional, always draining.
Many of those involved, from pin-striped bankers to young black professionals, had to set aside years of preconceived ideas and experiences to come to an agreement.
The transformation that the charter aims for began with its architects . "If you were to ask Jacko [Maree], he would admit he has changed his perspective . A better understanding of transformation," says Modise Motloba, president of the Association of Black Securities & Investment Professionals (Absip).
Absip played a key role in the process, on the other side of the negotiating table from the industry. Government was in the background at meetings and lobbying industry players .
"It took a huge amount of time to agree," says Maree. "The Absip perspective was much more around can we agree this is transformation?'. Both of us had to come to a realisation that we weren't going to get what we wanted."
The pressure to find solutions was immense . The process was sparked by a leaked draft of the mining charter last year, which caused panic among investors . That pressure was increased by the Community Reinvestment Bill, also tabled last year, which proposed forced lending for housing.
The combined effect was sufficient to drive the process over what often seemed to be insurmountable differences.
"The real achievement," says Sanlam Employee Benefits CE Themba Gamedze, "is that for the first time black and white professionals and business engaged constructively for a long time.
"There were times when we were dealing with fundamental issues which brought home the lack of common perspective and experience. But we pulled through," says Gamedze.
The charter was woven from many strands. The banking industry committed itself to addressing empowerment and access to financial services at a National Economic Development & Labour Council summit in August last year.
Months earlier, in parallel with the mining charter, the department of trade & industry (DTI) had begun drafting a charter, with the participation of Absip, the Life Offices Association (LOA) and the Banking Council. The DTI process was abandoned after the chaos around the leaking of the mining charter.
It left government quite comfortable to stay out of the discussions and leave the charter to the industry.
Various industry organisations, particularly the Banking Council and the LOA, began working independently on proposals. In January, the groups got together and began discussions. Absip participated with a mandate to speak for the Black Business Council.
But early on, discussions were difficult. "We'd call meetings and everyone wanted to be represented," says Maree. " You'd go to meetings with 40 people around the table, and no-one in charge."
In those initial talks, the chairmanship was rotated among the groups. But agreement was elusive.
The deadlocks hit a peak in July, when all 40-odd participants met for two days at Olwazini, a Nedcor training facility in Muldersdrift, north of Johannesburg . Two professional mediators, Charles Nupen and Tefo Raditapole, were brought in, but the meeting got through only a fraction of its agenda and ended in frustration and anger.
"Everyone was, like, gosh, here we've been for two days with lots and lots of people with facilitators, and we're still making no real progress' ," says Maree.
It was then decided that a core group of negotiators had to be formed, who could consult their respective constituencies outside the formal process.
That core group consisted of six people. Three were from Absip: Motloba, private equity fund manager Mutle Mogase and Kennedy Bungane from SCMB; and three were from industry: Maree, LOA chairman and Old Mutual SA deputy MD Peter Moyo, and SA Insurers' Association head Adam Samie.
Government, in the form of treasury deputy director-general Lesetja Kganyago, became a permanent participant. Nupen and Raditapole mediated.
By the time the core group got to work, a range of subcommittees had already worked out much of the basics and undertaken much research.
The core group undertook to integrate that work and come to a final charter. After each of the meetings, which took place almost daily , a drafting committee made up of Absip's Andrea Brown, the LOA's Deborah Marsden and the Banking Council's Bob Tucker, would work on the formal wording , often late into the night, to put a clean draft on the table for the next morning's talks.
Behind the scenes, the core committee members went back to their representative bodies to hash out the progress with them. That was often where the most heated discussions took place.
"The pressure everyone was under from their constituencies was enormous," says one.
Big flash issues, like the status of foreign banks or the specific inclusion of employment targets for women, were some of the most bitter. Contrary to expectation and media coverage, ownership wasn't the most contentious issue. Sources on both sides say it was employment equity and skills training.
Consider that the final charter requires that 4% of senior management be black women - a strange number to include, but one that took heavy negotiation. A member of the core group says the debate over black women nearly caused Absip to withdraw from the talks.
"One of the most ridiculous issues that came up," says Motloba, "was the industry saying that when women get to senior management they want to go away and have babies." But he is also quick to acknowledge that it normally takes several years to get to senior level and there simply aren't enough black women with that much experience.
"This was one of the most complex negotiations I've been involved in," says Maree. But "no meeting ever broke up in anger with people storming out".
The process began with discussion of principles: just what areas the industry had to consider and what tools were at its disposal. Putting targets and numbers to those broad areas was begun only in the last three months. That allowed for reasonably quick agreements, leaving the thorny issues for later.
Negotiations were on the go until the Tuesday before the charter was presented to finance minister Trevor Manuel on Friday last week. The status of foreign banks and government's role in the charter were two last-minute hurdles.
Differing interpretations of the wording of the document had led to confusion, and foreign bankers were not happy. But last-minute compromises were reached. John Coulter, head of the foreign banks' association and MD of JP Morgan in SA, now says: "I think we feel the document is a fair attempt at ensuring a level playing field ."
Banks and insurers had initially asked government to match the industry's commitment to empowerment funding but then accepted a compromise - government would accept some of the risk through its financing institutions.
All the players are now celebrating their successes. "I think the biggest achievement," says Motloba, "was provision of financial services, specifically banking facilities, to low-income earners. The second-biggest was getting empowerment financing on the table."
One member of the team says the charter participants still don't agree completely. The substance is not in the scorecard, it's in the wording of the charter . And there are different interpretations. For example, a review mechanism allows targets to be reviewed in 2009 and subsequent years. No-one is sure whether the mechanism is an opportunity to relax or toughen targets.
Gamedze concedes that the real test is in the application of the charter. " The work that's been done is partly what you see, the numbers and the rubric, but it has also been about putting in place the mechanism to drive the process."
Some analysts are upset about the targets for employment equity . Duma Gqubule, a BEE consultant, points out that Standard Bank, for example, has 12 executive management positions and 4% is just one woman. "Finding one black executive can't be too difficult."
Motloba asks whether those critics have the data to back up their statements or "whether it's an emotional reaction".
Gqubule also argues that the general employment equity targets are far too low and some banks don't have to do much to meet them. The employment equity battle often went beyond Absip and the industry. There were deep divisions among banks because companies have such different staff profiles.
But all the players, at least on the surface, are satisfied with the document . The hard part will be the implementation. There also have to be changes to various regulations - from investment rules for asset managers to the types of banking structures. But after the slog of the past 10 months the industry is a lot better equipped to tackle these tasks.
