A multinational private security firm has been ordered to make a once-off payment of R20m to more than 3,000 workers it used in an empowerment fronting scheme for 16 years.
The Broad-Based Black Economic Empowerment Commission has found that G4S Secure Solutions – a subsidiary of British private security firm, G4S Global – engaged in a misrepresentation of its B-BBEE status, which is an offence according to law.
The finding related to a complaint laid with the commission three years ago after at least 3,700 employees who were meant to earn dividends through a 13% stake in the company raised alarm.
The company announced in 2005 that it had given its workers a stake through G4S Staff Share Trust which improved its BEE status.
But 16 years later the company said no dividends could be paid to workers as the financial performance had not met the required criteria and therefore the trust had not accumulated any distributable reserves to enable payment to beneficiaries.
The commission however, found that while dividends have not been declared over the years, significant benefits have flowed to directors and key personnel at the company. Investigators found that company did not follow the principles of empowerment since the deal was secured in 2005.
The commission found that G4S Secure Solutions consistently claimed full BEE points for the 13% share owned by the workers through the trust. It further found that the deal resulted in the beneficiaries only owning shares on paper but with no access to the relevant information relating to the shares.
“Despite the 13% having been clearly declared by the company in all its reporting, the employees have never exercised voting rights as beneficiaries of the deal. In this case, participants were denied the right to meaningfully participate in the economy arising from the ownership and management of the 13% shareholding envisaged in section 2 (a) of the B-BBEE Act,” the report said.
The commission recommended that:
- within 90 days, the company amends the G4S Staff Share Trust deed and the shareholders’ agreement to align with the B-BBEE Act;
- with immediate effect, the company must ensure that workers appoint trustees and have access to documentation governing their trust;
- G4S issue a written apology to the workers.
The commission said if the company failed to implement the recommendations it would pursue criminal liability and request blacklisting by the National Treasury.
Trade union federation, Cosatu however has described the sanction meted out to the multinational security firm as a slap on the wrist.
Cosatu spokesperson Sizwe Pamla called for the company and its directors to be criminally prosecuted for exploiting workers to improve their BEE status and get more business.
He said compelling G4S Secure Solutions to pay for the fronting was not good enough to end the practice of using black people to score BEE points.
“The idea that people can pay their way out of breaking the laws has to come to an end. If people can break the law and then simply pay their way out, then what is the purpose of having those laws. There should be punitive measures that are taken against the directors and executives of this company," he said.
“The company must be blacklisted. This is deception. You have deliberately conned people. You’ve conned government and other people who made it clear that for them to do business with you, you need to satisfy their BEE requirement as stipulated by law.
“The company must also pay back the money that it earned using their BEE status which was deceitful. The people who deliberately put together the paperwork to enable the company to get business should be criminally prosecuted."
Leader of the workers, Abraham Matenjwa ,said the company had destroyed people’s lives by not paying what was due to them.
“There are people who died not having seen the money. Even the money they are going to pay is too small compared to the suffering we have endured over the years. We say these people must be punished because they have abused black people, exploited them so that they can eat."
G4S Secure Solutions said it has already begun implementing the recommendations of the report.
"G4S Secure Solutions remains deeply committed to advancing its transformation objectives. It recognises that empowerment is a journey that requires constant evaluation, refinement and improvement to ensure that it is aligned with advancements in B-BBEE legislation," said Suveer Gajoo, MD of the company.
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