Registered users can save articles to their personal articles list. Login here or sign up here

Agrizzi testimony sinks BEE agency Empowerdex’s accreditation

The firm’s accreditation has been suspended meaning it can’t take on new BEE verification clients.

The explosive testimony of former Bosasa COO Angelo Agrizzi at the state capture inquiry has not only implicated politicians in widespread and orchestrated corruption, it has cost SA’s prominent Black Economic Empowerment (BEE) verification agency its accreditation status.

Empowerdex, which assists companies in complying with BEE rules and regulations, has had its accreditation suspended by the South African National Accreditation System (Sanas) – the only national institution responsible for carrying out accreditation of verification agencies. Sanas falls under the Department of Trade and Industry.

Sanas’s suspension of Empowerdex for three months is a blow for the firm and, by extension the BEE industry, given the dearth of credible rating agencies in SA that are able to verify the empowerment credentials of companies. Empowerdex gets the bulk of BEE rating, verification and advisory work in SA, providing such services to more than 6 000 companies.

A Sanas spokesperson confirmed to Moneyweb on Thursday that Empowerdex is under suspension – effective from April 4, 2019 – due to its “failure to comply with some of the accreditation requirements”. It did not disclose the reason for the firm’s suspension, citing confidentiality clauses in the processes through which it accredits firms.

Ratings for bribes

However, Empowerdex co-founder Vuyo Jack said the suspension of the company by Sanas is linked to the March 2019 testimony of Agrizzi, who alleged that a former Empowerdex employee received bribes from Bosasa in exchange for dishing out favourible BEE ratings on the company and its subsidiaries. Along with the bribing of prominent politicians and state officials, a favourable BEE rating would help Bosasa win state tenders since government prefers to do business with companies that have strong BEE credentials.

Agrizzi alleged that Andries Sebelebele, an apparent former employee of Empowerdex, received bribes amounting to R40 000 per Bosasa-linked company (Bosasa itself and its subsidiaries) for purposes of “sorting out the BEE ratings”.

Empowerdex is disturbed by Agrizzi’s testimony, which “led to the suspension of our accreditation by Sanas,” Jack told Moneyweb.

He said Agrizzi’s testimony goes against Empowerdex’s “values and principles” – prompting the firm to appoint “an independent third party to thoroughly investigate the matter” – a step Empowerdex has undertaken in hope of having its suspension lifted by Sanas.

“Should the outcome of the investigation support Agrizzi’s testimony, appropriate action will be taken against the individuals concerned including but not limited to laying criminal charges against [those] individuals,” Jack added.

Work halted

The suspension of Empowerdex by Sanas means it cannot take on new verification clients (companies) or complete any verification assignments it received prior to the suspension.

“We are working with other reputable accreditation agencies that have agreed to accept the transfer of our current verification assignments,” said Jack. “Verification certificates issued prior to suspension [before April 4] remain valid.”

Empowerdex was founded in 2001 and is considered a pioneer by market watchers given that it started to specialise in the industry early on after South Africa had crafted its BEE policy and regulations. It has assisted companies to attain their empowerment certificates and comply with BEE and regulatory changes. Among these companies is JSE-listed and global industrials group Bidvest.

Jack is a respected businessman who served on the board of the Public Investment Corporation (PIC) from 2012 to 2015. He recently testified at the PIC inquiry that there was a culture of fear and poor decision-making, which led to governance issues at the firm that manages more than R2 trillion in assets on behalf of the Government Employees Pension Fund and other funds.

BEE compliance specialist Paul Janisch described the suspension of Empowerdex as a blow for the industry, as there are not many large firms that have the capacity to take on the large volume of clients and work that the firm enjoys.

Get access to Moneyweb's financial intelligence and support quality journalism for only
R63/month or R630/year.
Sign up here, cancel at any time.

AUTHOR PROFILE

COMMENTS   24

To comment, you must be registered and logged in.

LOGIN HERE

Don't have an account?
Sign up for FREE

Corrupting something that is already corrupt

Well said. BEE is nothing but “legal” racist theft and corruption; the rewarding of skin colour, not competence. Empowerdex and other so-called BEE ratings agencies have no right to exist. They are rubber stamping, corrupt agents of a racist regime.

So if former Bosasa COO Angelo Agrizzi’s testimony is so explosive, just why is the NPA dragging it’s feet in commencing procedures to prosecute those implicated?Is there political interference at hand there too?

Those who pin their hopes on prosecutions and jail time for the corrupt will be in for a rude awakening.

We get ruling party sponsored book burning when the truth is exposed, what will happen if one of their darlings is arrested?

Agreed David – they carried Tony Yengeni to Pollsmoor of their shoulders ululating. There is sooooo much cr*p that has come up since then that the Arms Deal feels like a naughty school boy prank. I know for a fact that there was an actual container of documentation handed to the Hawks by the joint German and UK investigating team. It’s probably been used as toilet paper …

Hopefully it sinks the BEE system the way it is designed as it is killing the economy.
Most accreditation agencies are like the auditing firms – assist in hiding the truth.

The sooner BEE is sunset the better and the sooner true transformation can take place.

@Africa Pragmatist

You tell me how people of colour was to get forward when the echelons of power in companies, sports, education and workplaces are blinded by colour and gravitate to what they comfortable with i.e. WHITE? This transformation was not going to happen by relying on the hearts of those in power. As SAficans who grew up in apartheid schools; we find it difficult to transform because of this “built-in” prejudice. If you are a white SAfrican; would your kid choose a black doll?

If you do not see past this statement please don’t read further because you are wearing tainted glasses.

BEE’s intentions were good. If you have 2 successful candidates for a job; then preference goes to the person of colour. However, progress here was slow; and then government started to speed up the process and then they started to employ under qualified people to jobs.

Bit racist from you?

As a business owner, I don’t care about your skin colour. I care about how well you do your work. I have employed black, brown & white with varied success amongst all.

It’s time for BEE to kick the bucket and time for MERIT to be the standard at which people are hired.

What utter drivel Muks. Restoration for the sins of apartheid should have been via three things only: (a) direct land removal restoration (b) large-scale primary and secondary education and (c) massive infrastructure spend. To choose racial parameters for work in a globalized economy, especially one competing for FDI is the sort of stupid that the ANC is a global leader in!

Institutionalised racial discrimination, sound like the exact thing that was being fought against…

If I look at Eskom, SAA, PRASA etc it tells me that the number of good managers amongst BEE candidates are extremely small, if any. In the past, Eskom even charged a premium on its bonds (E) in relation to the government bonds (R) because it was so good. Today Eskom is rated “junk” by Standard and Poors and R140 billion in debt- this is value destruction on an unprecedented scale. I don’t have anything against black Barbie dolls but I despise this corruption and ineptitude which Africa is so world famous for. The facts speak for themselves. The ANC cadres can’t work together to improve their societies. Their only aim is personal enrichment.

Muks. That is understood but remember that you can’t transform off the back of failing entities. It makes no sense that the Govt stick adhererntly to something that is failing the country and the people, especially those of colour. There are other better ways.

Muks -was going to write a long rebuttal but decided against it. You are entitled to your opinion. Nothing I write will change that, as you feel that a great wrong has been done to you. This is the main reason I despair for South Africa’s future and prepare my children to live and prosper elsewhere.

“You tell me how people of colour was to get forward”

By providing better service and working hard.

Vuyo Jack is a product of St Davids and Wits — not exactly “disadvantaged”

So the leading company in the unethical reverse-apartheid turns out to be unethical. That’s about as surprising as finding out that Cyril Ramaphoney is a liar.

The boss of the company is a CA(SA). And SAICA’s response is ……?

I absolutely agree with you. The problem is in your last sentence:

“However, progress here was slow; and then government started to speed up the process and then they started to employ under qualified people to jobs.”

That’s not what happened. What happened was that “preference goes to the person of colour” was misinterpreted – usually by over-zealous HR managers – to mean “no whites”. The concept of a “BEE appointment” arose, which was code for: don’t bother applying if you’re white. That’s not what BEE was intended to mean at all. With BEE properly applied, ALL positions should be BEE positions. But the novel interpretation was pretty much how Eskom got rid of its engineering and managerial competence – the jobs weren’t going to the best-qualified person, but the best-qualified non-white person, and it’s become evident that those people were, in many cases, far from competent regardless of their qualifications. The actual test that is applied in BEE appointments in the real world is quite different to the originally-intended test that you quote.

For BEE to work, all it has to do is adhere to that original “preference goes to a person of colour” ethos, because then people are favoured first because of their skills and then only because of their race. After all, if you’re incompetent, it doesn’t matter what colour you are – modern enterprises can’t carry deadweight; the shareholders won’t allow it. With BEE properly applied, restorative employment practices are managed with the minimum of prejudice. In fact, it would encourage excellence, because the White applicants would have to ensure they didn’t get into any comparisons if they wanted the job. They would simply have to be better than any other conceivable applicant and I fail to see how that could be bad for them, for business, or for job competitiveness.

The problem is that this would have required a competent education system to feed skilled applicants into the job market. With SA’s lamentable returns per budget spend per capita on education, the BEE system is now so endemically broken it may as well be scrapped for all the difference it makes to outputs, especially in the public sector.

2000 years ago the Romans already used to say:”Ex turpi causa non oritur actio” which is Latin for “from a dishonorable cause a legal action does not arise.” Therefore if something is conceived on the basis of prejudice and discrimination without regard for any merit, how can something good ever come of it? What will happen is exactly the opposite, it will only bear more dishonesty, injustice and results which have no merit.

“BEE Industry” seems like a delusional phrase. Industry means activities aimed at adding value to the economy.

“has had its accreditation suspended by the South African National Accreditation System (Sanas) – the only national institution responsible for carrying out accreditation of verification agencies. Sanas falls under the Department of Trade and Industry.”

Kudos to someone who is actually taking action against the entities proven to partake in state capture and general lawlesness!

Sanas 3 months suspension for blatant dishonest is not in line what industry get “dish-out” out for audits for sanas and it parties..
Nevertheless, cannot think of a nice crowd to get a their own medicine

Racism did not work under Apartheid and it will not work under the ANC BEE policies. It is time for us to remember Nelson Mandela’s words ” Never, never and never agian shall this beautiful country —-” I am sure you can complete the quote.

Consider how much these ratings agents charge for their services – it doesn’t come cheap. Now one can’t even trust them! Smaller companies that work their backsides off (and are supposed to be the “job-creators” to boost GDP) have seen their expenses sky-rocket over the past few years to get accredited.
Those companies should be refunded. And it’s time minister Rob Davies stops messing with business – especially small to medium sized ones – with his string of BEE laws and regulations that don’t even add up and contradict one another.

Load All 24 Comments
End of comments.

LATEST CURRENCIES  

USD / ZAR
GBP / ZAR
EUR / ZAR
Insider GOLD
ONLY R63pm

Moneyweb's premium subscription is a membership service which will give you access to a number of tools to take charge of your investments.
Or choose a yearly subscription at R630pa - SAVE R126

Get instant access to all our tools and content. Monthly subscription can be suspended at any time.

Podcasts

GO TO SHOP CART

Follow us:

Search Articles:Advanced Search
Click a Company:
server: 172.17.0.2