In his new book, Chris Bishop talks to B-BBEE boss Zodwa Ntuli

In The BEE Billionaires, Chris Bishop asks the question: Has BEE achieved what it was set up to do, or will it prove more hindrance than help? By

In The BEE Billionaires, veteran journalist Chris Bishop talks to some of the biggest names in black economic empowerment. Examining their struggles and the impact of BEE on their successes, Bishop seeks to uncover how BEE has succeeded and failed. It has made billionaires of some, ruined others, and remains controversial.

He is the author of the bestselling book Africa’s Billionaires. Here is an excerpt:

S***

BEE sheriff on the trail of bad guys

he is supposed to be the all-powerful sheriff with the big guns, tall in the saddle, hunting down the bad guys – the frauds and the cheats – trying to sidestep their black empowerment obligations, in the interests of the people. Instead, to stretch the metaphor, she sits with precious few bullets astride a scrawny horse, limping along with a fraction of the money needed to hunt down the bandits on the dodge; struggling on the trail of the lonesome prosecution.

This is the unenviable lot of Zodwa Ntuli, the current B-BBEE commissioner. As the independent regulator, it is her job to oversee compliance in the implementation of black empowerment policies in South Africa, in the face of indifference, chicanery and confusion over the rules. It is a tough job, to say the least, as she battles through penury and pandemic.

“The first thing that I must say is that we actually are encouraged by the fact that there are so many B-BBEE initiatives that are being implemented in this country,” she tells me with a whiff of optimism on a cloudy day in Pretoria, between meetings. “That tells us that, increasingly, more and more entities are trying to actually comply with the legislation and get the entities more transformed, and to meet their targets … even during the Covid pandemic, in 2019 and 2020, we still saw activities, we still saw ownership deals that were reported to us, because, by law, any major B-BBEE transaction – that is a transaction that is R25-million and above – is required to be reported to the B-BBEE Commission.”

Ntuli is a fairly low-profile and pragmatic civil servant. She has a ready smile and scarce biographical details on the internet but takes a professional and serious approach to a tricky and thankless job. In her position, no matter who you are, you are hardly going to be liked. Lawyers and businesspeople mutter that Ntuli is difficult to deal with and sometimes doesn’t listen. In November 2020, an editorial in the Business Day accused her of abusing her powers and going “rogue” in her approach to transformation. Even Wiphold, the legendary women’s investment outfit, founded in the 1990s with the avowed intention of garnering black empowerment deals for women, had harsh words for Ntuli and the government.

Louisa Mojela, a Wiphold founder, complained about the regulatory confusion around the broad-based schemes after Ntuli had questioned whether these schemes fit in with the legislation.

“You talk to the commissioner and she says one thing. You talk to the minister and the minister says another thing,” Mojela commented to the Sunday Times in November 2020. “You have a commissioner who seems to be fighting and wanting to come up with her own interpretation of this policy. Then you talk to the department and they seem to be understanding and supportive of our broad-based ownership.”

These broad-based schemes, aimed at bringing ownership and wealth to communities, were at the heart of the second issuing of the BEE codes. According to lawyer Caryn Leclercq, they can be successful, but are difficult to manage and often beset by squabbles. “I think they are a beautiful thing,” she says. But, as she points out in Chapter 7, one of the main problems “is managing the expectations of the community”, who are unlikely to see any returns for a long time.

Employee schemes in companies can be fraught for the same reason, because of having to lend workers capital, through vendor financing, to be repaid by foregoing share dividends.

“You would have vendor finance and [the employees] would have to pay off their dividends,” Leclercq explains. “That didn’t really work, because then [they] wouldn’t see dividends for ten years and you have unhappy employees, of course. I have certainly seen that, which is why they used the trickled dividend device…”

All part of a day’s work for the commissioner. Yet, you get the feeling Ntuli is determined to slay any dragon that threatens the future of black empowerment – especially the beast of fronting. On public platforms, she has railed against fronting, calling it fraud, thieving, rent-seeking and money-laundering.

“It takes a very simple form, at times, a very straightforward form, where an unsuspecting black person, who is either a worker or a domestic worker [or] a gardener, is then listed as a shareholder, just for the purpose of the company looking black,” she says. “But then it also [works] in a sophisticated manner, when deals are structured in such a way that even with people that are knowledgeable of these deals … the financing arrangements that are involved are such that the deal will never actually result in a transfer of that particular shareholding into black hands.”

The BEE Billionaires is published by Penguin Random House (R260). Visit The Reading List for book news and excerpts.