By Pinky Khoabane
How a BEE programme meant to empower Blacks in the transport industry ended up empowering White firms……
It was an elaborate programme with all the checks-and-balances- were it not for a group of greedy individuals. Its goal was to emancipate truck drivers and to facilitate the entry of previously disadvantaged operators into the multi-billion rand freight transport industry.
The programme was a collaboration between financial institutions and development-funding institutions in order to ease entry for black entrepreneurs into the industry. In many instances, the freight companies got involved and turned their truck drivers into owner drivers who continued to service the freight companies, not as employees anymore, but as entrepreneurs.
Special loan facilities were developed by which financial institutions would provide finance for the purchase of trucks on the back of sustainable transport contracts offered by the big transport operators.
In the Mercedes Benz Financial Services case, the Industrial Development Corporation stood surety in an amount of R300m while the National Empowerment Fund provided working capital for the entrepreneurs. In another partnership, IDC and ABSA offered R400million over a set period and the development financier guaranteed the scheme to a tune of R200m; effectively sharing 50 percent of the credit risk.
Everything was really in place to execute government’s key pillars in turning the economy.
White-owned management companies cropped up everywhere and their task was to offer support services such in business administration (compliance with laws that govern businesses, payment of SARS, salaries, repayment of loan and other related payments such as insurance, etc), source sustainable transport contracts, mentorship and training.
In all the cases I’ve dealt with, the trucks involved were Mercedes Benz trucks. The management companies led the entrepreneurs to Mercedes Benz dealerships. These dealerships would in turn, send black entrepreneurs looking for trucks to the management company. For example, Jason and Dave Tabraham sold at least 40 trucks in a son-and-father arrangement in the Mercedes Benz Financial Services Scheme. The son worked for the dealership and his father owned the management company, Mobile Outsourced. Within months, the management company was bankrupt leaving the entrepreneurs with vehicle finance which they couldn’t service. Dave moved to another management company, Tradewing, and together with Afrifresh, exporters of fruit, started a similar scheme. Again, within months, the partnership had enlisted black entrepreneurs who were enticed into taking out vehicle finance for trucks sold by his son, Jason. Like with the first company, this one too went bankrupt leaving all the beneficiaries destitute. They have all lost homes, marriages and their trucks have been repossessed.
In Gauteng and Kwa-Zulu Natal, similar stories are told with other management companies.
Now the malaise of the programme is stirring controversy with questions about the true beneficiaries of the Scheme.
Numerous lawsuits and complaints, ranging from fronting to tax fraud, have been lodged by the “beneficiaries”.
In an affidavit lodged in the North Gauteng High Court in September last year, Tshiamo Association, a group representing 18 entrepreneurs, says they were “exploited” and have “suffered continuing and substantial financial losses and severe emotional distress”. The only people who benefited, the group contends, are the white-owned management agents, motor dealers and the financiers – all of whom fall outside the group for which the Scheme was intended.
Similar claims are contained in a report compiled by the Presidency following accusations by a group of former employees of Amalgamated Beverage Industries who turned owner drivers. The accusations were sent to the Department of Trade and Industry for investigation. The Financial Services Board and SARS have also been investigating ABI’s scheme.
Tshiamo have also lodged a case with the SAPS against the management companies involved. Their case is currently with the National Prosecuting Authority.
The story of this country’s transport BEE scheme is one of the most heart wrenching. We are not socialized to see men cry, more so when they are elderly but the sight of a room packed with men whose lives were ruined as a result of the ABI Owner-Driver Scheme haunts me to this day.
There have been few successes in the implementation of BEE. The establishment of the BEE Commission and revised codes of good practice, should curb such incidents. However, this Commission will have to be vigilant. It must be given the support to police BEE and broad-based BEE. Ultimately, however, whites must understand BEE for what it is and therefore embrace it: It is the only constitutional and peaceful means by which to transfer wealth from whites to blacks.
BEE: Is it benefiting Blacks
The BEE model, premised on black ownership in white established companies has been flawed. Blacks have had to find finance, from institutions owned by white monopoly capitalists, to buy into their companies. The beneficiaries have often been chosen according to their connections to political and government connections. The capitalists’ requirement in a BEE partner is the latter’s ability to generate profits for them.
This model has created a small elite group of Black dependent capitalists. Many have emerged in recent months as protectors of profits of their capitalist masters in the name of protecting the economy.
Fronting, corruption and patronage have become rife due to this model of BEE.
BEE Commission set up in April 2016
The BEE Commission was set up to investigate fronting and other abuses and had by Sept this year noted 96 complaints. It came as no surprise that complaints included:
- – BEE shareholders have no authority
- – BEE shareholders weren’t involved in the management of the companies & financial information was withheld from them
- – BEE shareholders were simply there to meet BEE rating levels
- – BEE rating companies, owned and run by whites in most cases, were themselves corrupt and often gave score-cards without consulting the BEE beneficiaries
What Danisa Baloyi, President of Black Business Council says about BEE
Truth be told, BEE has largely empowered our white compatriots. Let me drill it down, we set out as black people and put together positive policies, then we give them to government who then give it to white consultants and we end up with diluted versions of policies that were never our design, but they get implemented by our government as we watch from the sidelines in disbelief-disempowered. Case in point so I cement my argument; I was part of the BEE Commission that was chaired then by our current Deputy President. We spent months working on the document, beautiful, balanced as we gave and took. We handed in our recommendations to our then Minister for Trade and Industry who actually said at the launch, “Black man you are on your own”, and the response from our then Chairman was “yes we are on our own with our government”. However, what we handed in and what ended up enacted were 2 different things. I remember, the that I remarked, after the SONA that year “ that we asked for a Rolls Royce, and we got a Volksie”. It got me in trouble, but it WAS THE TRUTH. The end product moved from being Black Economic Empowerment (BEE) to White Empowerment (WEE) which remains until today!!.