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Black business should stop charging double prices to government, says Deputy President Mantashe

Black business should deliver affordable, quality products and services if it wants government contracts, ANC secretary general Gwede Mantashe said on Tuesday.

“As we support black business, black business must bring a commitment of delivery, cost-competitive and quality of items that are procured,” he told analysts and business people in Soweto.

He asked why a government-built school cost a minimum of R20 million to construct, while a private sector-funded school only cost around R5m to R10m.

“Something is wrong with this system of creating layers and layers of business because the primary objective of building a school is made secondary… to creating business beneficiaries.”

He was addressing analysts as part of the African National Congress’s programme to speak to various sectors in South Africa.

Mantashe said the primary outcome of the ANC lekgotla in July was that the government needed to drop the system of tenders.

It needed to move away from giving business to black companies, and then afterwards arguing about quality and cost.

“Don’t undermine this question of people delivering bridges that get eroded with the first rainfall. It can’t continue. It just can’t continue. It is wrong. It is wrong.”

Mantashe suggested that black businesses look to SizweNtsalubaGobodo, South Africa’s largest black auditing firm, as an example of how to succeed.

The company started small, but now handled the entire audit account of parastatal Transnet because of the quality of its work, Mantashe said.

He said the ANC would meet the Black Business Council (BBC) to discuss the strengths and failures of black economic empowerment (BEE) and the role of state procurement in transformation of the economy.

A representative from the BBC had complained that the government’s procurement policy had gone wrong.

Various delegates raised questions about the effectiveness of BEE policies.

Mantashe responded that he had a problem with the idea of BEE.

“I have a serious grievance with BEE… focusing on shareholding with beneficiaries not being operational.”

He said if the beneficiaries of BEE deals were not part of operations, they were not gaining a deeper understanding of the business in order to grow.

“Operational exposure, to me, is more powerful than just ownership…”

Mantashe drew parallels with when the Afrikaners were in power from 1948 to 1994.

“Afrikaner capital, after 40 years in power,… they couldn’t produce a single CEO of mining, not one.”

All CEOs of mining companies up until 1994 were white and English.

“We should not wait for 40 years to produce genuine black CEOs who can run companies.”

He commended Xstrata’s South African CEO Sipho Nkosi for not being a “window-shopping CEO”.

“Sipho Nkosi is not a big shareholder, but he is very operational… he knows mining. To me, that is how we are going to transform the economy.”

When questioned about factions within the ANC, Mantashe said they had been around for years.

“I wish we can have an organisation that has no factions.”

He spoke of a Pan-Africanist faction splitting from the ANC amid “violent polemics” in 1959.

“It was then, it is today, it will be in future,” Mantashe said.

However, he said: “When there are confrontations in an organisation, we always exaggerate them as always a division about to see a split. I think that is a flawed analysis when there are politicians.”

He said the contradictions helped move the party forward.

“The fact that people have different views… actually it sharpens you.”

Communist Party supports punishment of SA whites for ‘fronting’

The SACP has welcomed the Broad Based Black Economic Empowerment (BBBEE) Amendment Bill which would see the assigning of a commissioner to solely investigate incidents of fronting.

“The SACP urges government to move with the necessary speed to finalise provisions in law that allows for fronting to be criminalised,” said spokesman Malesela Maleka on Wednesday.

Fronting is when companies place unqualified black individuals in high positions so the companies seem to be complying with the BEE Act.

The black individuals are made to look as though they own the company or have decision-making powers in the company when they actually do not.

“Such levels of dishonesty are nothing but corruption. Those who are involved in fronting are merely reproducing a parasitic, compradorial and colonial type relation between black sections of the capitalist class and established capital,” said Maleka.

“The SACP calls on government to act decisively and criminalise fronting, to investigate the nature and extent of the practice and to act against those involved.”

On Tuesday Minister of Trade and Industry Rob Davies said the Amendment Bill would put in place strict measures to tackle fronting.

He said a commissioner would be assigned to receive cases of fronting and investigate them.

Davies said ordinary law enforcement officers did not have the capacity to investigate transactions to see where fronting was taking place.

“We welcome government’s decision to appoint a commissioner to deal with this scourge,” said Maleka.

– SAPA

New bill will punish whites for ‘passive black shareholders’

The gazetted Broad Based Black Economic Empowerment (BBBEE) Amendment Bill will put in place strict measures to tackle fronting, Trade and Industry Minister Rob Davies said on Tuesday.

“What we are doing is defining it much more closely in the bill so that there is a specific statutory offence of fronting,” Davies told reporters in Pretoria.

Fronting is when companies pretend to be compliant with the act by placing blacks in positions that would make them seem as if they either own the company, or are at a level to make decisions in the company.

“Now that would be a fraud because you are trying to do that because you want to get a regulatory benefit, or present yourself as something that you are not, and that is fraud.”

Davies was speaking after a presidential BBBEE advisory meeting which reviewed the progress of the act and the codes of good practice.

He said a commissioner would be assigned to solely focus on fronting. The commissioner would receive and investigate cases of fronting, correct the situation and, in extreme cases, he would have the authority to prosecute those involved.

“The problem is we haven’t got provisions in place to catch fronting… ordinary law enforcement officers don’t have the capacity to go and investigate transactions of that nature to see where fronting is taking place.”

Currently those found guilty of the practise can be charged with fraud and face imprisonment.

“So we are introducing a BEE commissioner who will be charged with looking into the matter,” he said.

Davies said the objective was to provide ways to measure the degree to which an individual was involved in empowerment.

Council sub-committee chairman Sandile Zungu said they were focusing on fronting because it infringed on human dignity.

“If we are to build a society based on justice then fronting has no place in our society.”

Zungu said the practice had reached the stage of “aggressive fronting”.

The minister said the amendments to the bill would ensure black economic empowerment contributed to the creation of real entrepreneurs in South Africa.

“It opens up new opportunities for black business people who are active players in the economy, and are not passive shareholders in somebody else’s business.”

– SAPA