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BEE inadvertently became ‘prime enabler of State Capture and corruption’ in South Africa

Simon Mantell
By Simon Mantell
3 Apr 2019
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Instead of righting the economic wrongs of the past, BEE had the opposite effect as the economic plight and well-being of the vast majority worsened due to ill-conceived and poorly implemented legislation.

It cannot be gainsaid that urgent economic redress of the previously disenfranchised majority was one of the government’s most pressing priorities post-1994 and it was for this reason that a raft of BEE legislation was promulgated with the intention of delivering real economic empowerment to the masses.

However, instead of righting the economic wrongs of the past, BEE had the opposite effect as the economic plight and well-being of the vast majority worsened due to ill-conceived and poorly implemented legislation which provided fertile ground to spawn corruption and State Capture on a scale not seen since the days of Rhodes’ Cape Colony and Kruger’s Zuid-Afrikaansche Republiek.

The popular view promoted to a gullible public, and one actively supported by current ANC politicians eager to avoid responsibility, is that State Capture and corruption of the “lost nine years” is exclusively the work of an errant president, his acolytes and a few immigrant businessmen from the sub-continent when the reality is that the insidious tentacles of State Capture and corruption which now strangle our country’s economy are the progeny of misguided BEE policy which pre-dates Zuma by at least a decade.

The cynical hijacking of BEE at the expense of the masses due to political expedience together with personal and corporate greed is best illustrated by:


  • The “early day” major empowerment deals involving listed companies and politically connected individuals;

  • The fast-tracked employment equity redress making almost exclusive use of deployed ANC cadres and other politically connected individuals irrespective of their competence and with total disregard for operational cost and impact it would have on SoEs and the civil service;

  • The insertion of tenderpreneurs into almost all significant procurement deals involving government departments and SoEs and their private enterprise suppliers


Empowerment deals for politically connected individuals

In the late 1990s and early 2000s empowerment deals of little or no value for the masses attracted significant media coverage but few financial journalists asked the hard questions.

Listed companies under pressure to comply with what was new BEE legislation fell over themselves in the rush to empower selected politically connected individuals in convoluted share schemes which were devoid of any proper commercial value.

Legally compliant BEE deals created “empowered” paper multi-millionaires and the occasional billionaire overnight who, by virtue of their new-found skin in the game, cosily sat on the same side of the fence as “old white capital”.

The scene was set for a future cohort of politically connected individuals who now wished to emulate those who had already feasted at the JSE-approved table – the only problem was that the financial crisis of 2008 had effectively dried up the well for further listed empowerment deals which then led to the cruder form of empowerment best illustrated by the Bosasa- and Gupta-type modus operandi for which our politicians and business leaders now feign shock and indignation.

The gauche conduct of the Guptas and the Watsons has attracted much opprobrium from the establishment and one wonders why, because when distilled to the very essence, it appears there are few differences between the sanitised JSE share empowerment schemes showering untold paper wealth on a few politically connected individuals and the alleged promises of Cabinet appointments, tacky Dubai travel junkets and cash in paper bags. Either way, are obligations not created?

While there were some genuine empowerment deals, the fact remains that the masses were conveniently bypassed as individuals became fabulously wealthy without breaking into as much as sweat and the foundation was laid for the blatant corruption now being exposed at the Zondo Commission.

While proactive employment equity redress in line with BEE is a necessity, the destruction of SoEs at an executive and senior management level by mainly incompetent and frequently corrupt ANC cadres is best evidenced by all the discredited boards and senior management at these SoEs.

A perfect example is Eskom where experienced engineers and senior management were let go in an uncontrolled fashion to be replaced by individuals who oiled the wheels of procurement corruption through their active participation in illicit schemes.

The cynical manipulation of BEE legislation has failed the country with the net result being that every major SoE in this country has failed both operationally and financially and bailouts of hundreds of billions, if not trillions, will be used to prop up these businesses which are mostly beyond redemption.

It would appear that the PIC, the custodian of government employees’ wealth and of whom the vast majority is black, is on a similar trajectory where money which should have been available for true empowerment is being systematically stolen by an incompetent and politically connected elite aided and abetted by parts of a compliant corporate SA.

As the era of listed empowerment deals came to an end, the next empowerment frontier was for an elite minority to be parachuted in as middlemen to grease large procurement deals between government departments, SoEs and the bigger suppliers of goods and services.

Based on the rand value of government and SoE procurement, it is most likely that the “hidden tenderpreneur premium” which SA has paid for goods and services over the last decade is R1-trillion or more – another spectacular example of the mugging of the masses.

It is anathema for politicians to admit that they have failed but the reality is that BEE version 1.0 with respect to empowerment deals, cadre deployment and tenderpreneurs has run out of road and true black empowerment has been deferred for decades.

Like a spoilt child who once had lots of valuable toys in a toy box, our government, using BEE version 1.0, first smashed the best toys like Eskom, then abused others like SAA and is about to break the remaining ones like the PIC and Transnet and sadly, any other toys that could have contributed to real black empowerment are now almost worthless.

I challenge any sitting cabinet minister to provide evidence that his or her ministry is functioning at a level even close to acceptable world standards. No doubt, their collective silence will be deafening, leading to the conclusion that if a government cannot even govern properly, then how can it even hope to develop or implement a cogent BEE policy that will facilitate the economic emancipation of the vast majority of our population?

The masses are not enjoying a better life as promised. Rather, they are being systematically robbed and for this, the ANC, its empowered elite and tenderpreneurs together with compliant private enterprise partners are guilty as charged. DM

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