Netcare denies BEE-fronting allegations
MEDICAL giant Netcare has denied allegations of BEE fronting levelled against it by Milagros Social Development.
Netcare came under fire after Milagros laid a complaint with the BEE Commission against the Mother and Child Trust (MCT) – a company registered by Netcare in 2005 as part of its BEE scheme, Health Partners for Life (HPFL) – accusing them of breach of contract.
Netcare confirmed that a complaint had been laid, but denies it was involved in BEE fronting.
“Netcare confirms that Milagros have laid a complaint with the BEE Commission, and a meeting is scheduled to be held between representatives of MCT and the commission on Wednesday, June 28,” said group human resources director Peter Warrener.
He added: “Netcare disagrees with the contents of the allegations in the complaint to the commission, but confirms that the company and the trustees of the MCT are committed to resolving the matter.”
Warrener also confirmed that MCT representatives would meet with the Disabled People South Africa’s Investment Holdings on Friday in response to a request from Milagros for a meeting.
Milagros’s shareholders are all black women. The company was selected as the anchor beneficiary of MCT, one of four BEE trusts registered under the HPFL transaction.
Milagros said MCT broke the conditions of the transaction by refusing to pay it the three vestings – or the rights that beneficiaries have to the income or assets of a trust – in the months of November in 2014, 2015 and 2016.
This was after Milagros was awarded 2 million trust units linked to a corresponding number of Netcare shares at R12.76 a share, with a loan of more than R25 million provided by the medical giant, in which the shares were locked from 2008 to 2012.
Thereafter, 20% of the shares could be disposed of through a sale – the beneficiaries could choose to sell or transfer the shares to their personal brokers – the net proceeds of which would be paid out to the beneficiary after a deduction of interest, among other deductions.
Milagros said they received the vesting for 2012 and 2013, but not for the next three years, which is why they allege fronting.