CARMEL RICKARD: B-BBEE Commission found to be on the wrong track

The Broad-Based BEE Commission, set up to police the law on B-BBEE, does not emerge well from a new decision of the high court in Pretoria.

The court was reviewing the commission’s damning finding against transport company Cargo Carriers in a case concerning six people who joined the firm’s owner-driver initiative (ODI).

Simon Maduna and five others complained that Cargo Carriers did not let them access the business accounts set up to manage their financial affairs as they became owners of their own trucks.

Maduna told the commission he had concluded service, management and finance agreements, and after that worked as an owner-driver for just one month before the problems began. He wanted to use the funds in his business account, but was denied access. He further claimed he didn’t understand the "empowerment deal" or its objectives, and was "surprised" when Mercedes-Benz told him he owed it money. He wanted "compensation" from Cargo Carriers for unspecified monies due, and for the company to settle the remaining debt with Mercedes-Benz, while he retained ownership of the truck.

The commission’s initial assessment was that Cargo Carriers had acted contrary to the B-BBEE Act and that investigations were needed to determine whether fronting was involved. It then delegated its investigative powers to Ubuntu Business Advisory & Consulting.

Those findings were damning of the company, and recommended punitive compensation. Cargo Carriers, the commission found, benefited from the ODI by way of an improved BEE status to the detriment of the drivers; the scheme to manage the owner-drivers’ businesses meant they lost their decision-making powers and access to funds; despite claims of training, there was no evidence it had ever happened; the six complainants were deprived of the economic benefits they expected; and the conduct of the company could amount to fronting or other violations, "which are criminal offences".

But high court judge Sulet Potterill painted a very different picture, concluding that the commission’s finding that Cargo Carriers benefited from the contracts was "irrational" and "not connected" to the evidence before it.

The commission’s findings were ‘irrational’ and ‘not connected’ to the evidence before it

Trainers from Cargo Carriers gave evidence of the four-day intensive training of the ODI concept, as well as ongoing training. There was also evidence, from notes taken by a trainer at the time, that the six were "negative" towards explanations of the accounting standards that had to be maintained and the "strict financial management of their affairs".

While the commission held that the four-day training "never took place", the court said this was "unfounded, untrue and irrational".

Under their contracts, the six were not allowed access to their business accounts without approval of the management company for the first 48 months, after which they would have full access. According to the commission, this showed they were prevented from exercising true independence and autonomy over the financial affairs of their businesses "while being subjected to high financial risk".

Despite these agreed conditions, the six withdrew funds from their accounts without permission, leaving insufficient money for business expenditure. Ultimately the service agreements came to an untimely end, via breaches that the commission denied had ever happened.

‘No jurisdictional facts’

The court’s careful analysis of the woeful behaviour of the six would-be owner-drivers — and other proven facts — contrasts sharply with the commission’s extraordinary findings. The court said the commission’s findings on fronting, for example, were irrational and that "not a single jurisdictional fact for fronting was established by the commission".

Ultimately, the court found that "all the findings" of the commission should be reviewed and set aside, and the complaint against Cargo Carriers dismissed, with the commission ordered to pay the costs of the application.