Fines often just a slap on wrist for firms

From its inception, the practice of black economic empowerment in SA has been marred by incidents of fronting, where those who hold the levers of power in corporates misrepresent or overstate their organisational transformation efforts.  

The question has always been how perpetrators of this fraud and misrepresentation are adequately held to account.

Yesterday we reported that G4S, a multinational private security firm, has been ordered by the Broad-Based Black Economic Empowerment Commission to make a once-off payment of R20m to more than 3,000 workers it used in an empowerment fronting scheme for 16 years. 

In 2005, the company announced that it had given its workers a stake through G4S Staff Share Trust which improved its BEE status. 

Three years ago, a complaint was laid with the commission after its employees who were meant to earn dividends through a 13% stake in the company protested that they had not been paid what was due to them. 

The importance of their victory this week can never be overstated, both symbolically and to some degree, financially. 

Notwithstanding that the company stated it did not perform well financially and therefore no dividends could be paid to the workers, it was found to have paid some of its directors and key personnel.

Furthermore, having the employee trust reflected on its books strengthened its BEE status, placing it in good stead to potentially benefit from contracts, even though it failed to honour its obligations to its workers. 

This week the company stated its commitment to transformation, suggesting that its actions may have been oversight on its part and its failure to constantly evaluate and refine its BEE requirements in line with government legislation. 

The truth, however, is that its conduct in this regard has been nothing short of disgraceful. 

We welcome the findings and the order by the commission for it to pay up, apologise and amend its trust deed.

Yet, we believe it does not go far enough to adequately address the gravity of its potentially illegal conduct over the years. 

Too often companies atone through paying fines while those who preside over such decisions face no real consequences for their conduct.