Questions have been raised about the legality of a list of names published by the Broad-Based Black Economic Empowerment (B-BBEE) Commission stating they are under investigation for possible fronting practices and non-compliance with the B-BBEE act.
Attorney Gideon Gerber, also the founder and director of Serr Synergy, a company that specialises in B-BBEE structuring and compliance, told FTW he believed the companies in question could take legal action. “The law makes provision for the B-BBEE Commission to publish names of companies and people once it has completed investigations, not before the investigations have even started. At least nine companies on this list have only been given notice that they will be investigated,” he said. “In addition, companies have 180 days to act on any findings following a completed investigation.”
The Department of Trade and Industry (dti) issued a press release on behalf of the B-BBEE Commission stating it had initiated investigations into specific entities for possible violation of the B-BBEE Act relating to the B-BBEE ownership structures and noncompliance with the codes of good practice in respect of the verification process.
Chantele Schutzler, a director at Morris, Fuller and Williams Attorneys, said it was their view that the published list of company names could not have been sanctioned in terms of the act and it was made outside the scope and mandate of the B-BBEE Commission.
“I cannot find any section that would allow the Commission to publish a list of companies that are under investigation. This, in my view, is the first question that the Commission needs to urgently provide clarity on,” she said. “The other issue is that the B-BBEE Commission is currently investigating 182 companies for various infringements and yet it has only named 17 of these companies. That in itself is highly prejudicial to those entities listed. They are currently suffering irreparable harm to their brand. Once the investigation is complete and these companies are possibly found not to be in contravention of the act they would have undoubtedly already incurred financial loss. Potential and even current clients of the listed verification agencies will undoubtedly instruct other agencies not listed to do their verifications.”
Gerber, who represents several of the companies on the list, said steps were in place by at least one company to obtain a court order against the Commission to remove the list from the public domain.
Schutzler said while there was no doubt that the companies would be successful in obtaining such orders, the damage had already been done and they would have to consider their options in suing for their financial loss and reputational damage.
Peter Warrener, group human resources director of Netcare – one of the 17 companies named on the list – said they had been notified by the Commission that they were being investigated to determine whether the B-BBEE ownership initiative facilitated through Health Partners for Life, met the necessary ownership requirements.
“We are preparing documentation to submit and will hear from the Commission once it has had the opportunity to review,” he said.
According to Gerber there are several inaccuracies on the list – from company names being incorrect to statements that numerous letters of advice had been sent.
“In some cases there has been no notification, not to mention numerous letters of advice,” he said. “The intent behind this public list is questionable."
AQRate KZN, which operates under the same marketing banner as AQRate (Pty) Ltd, has also hit out after the publication of the list that claims AQRate Verification Agency is under investigation.
“There is no such legal entity,” said Schutzler. Dti spokesman Sidwell Medupe told FTW that to his knowledge the list was correct. Further questions posed were not answered by the time of going to print.
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At least nine companies on this list have only been given notice that they will be investigated. – Gideon Gerber
