Discovery sticks to its guns
Financial services group says allocation of bank shares to blacks only isn’t racist; AfriForum disagrees
THE recently unveiled Discovery Bank will not withdraw its decision to allocate 10% shares to its black depositors despite backlash from formations like AfriForum, which has described the move as racist.
Discovery chief executive Barry Hore said the decision to allocate the shares to blacks was driven only by Discovery’s “deeply patriotic and values-driven organisation”.
He said it was committed to investing in excess of R13 billion into South Africa over the next five years.
“The recently launched Discovery Bank is central. Against this background, there is both a clear moral imperative and statutory requirement for transformation in our society.
“Specifically, as part of the licensing process for Discovery Bank, a commitment was made to the SA Reserve Bank of direct black ownership in the bank,” said Hore.
People who were not Discovery clients were also allowed to join the bank.
While the bank was recently launched, clients could only join in March when the bank becomes operational.
Hore said the bank’s broad-based black economic empowerment (BBBEE) scheme had been structured in a broad-based and equitable way.
“It is important to clarify that this is not a donation and the shares are not free. Qualifying participants of the scheme will need to purchase shares via vendor financing and will be subject to conditional requirements that will need to be met over the term of the scheme,” said Hore.
Asked who was defined as blacks, he said those who fell under the umbrella of BBBEE legislation.
This included Africans, Indians and coloureds, according to Act 46 of 2013 (“the BBBEE Act”).
“Our view is that a BBBEE scheme that will have broad reach by directly linking to individual clients is equitable and preferable than a scheme in which only a few people or narrow groups would benefit,” said Hore.
But AfriForum’s deputy chief executive Ernst Roets described the decision as “unashamedly racist”.
AfriForum has also urged those who feel offended by the move to approach Discovery and air their “shock and disappointment”.
Hore responded: “We are engaging with AfriForum to clarify the rationale for Discovery Bank’s BBBEE scheme.”
Malusi Zondi, secretary-general of the Federation for Radical Economic Transformation (FFRET), a pro-black business lobby group, welcomed the move, but said he would be engaging with Discovery to ascertain the criteria.
“This is a right move in addressing the injustices of the past which sidelined blacks from participating in the economy. We applaud Discovery, but I will be meeting with them soon because we don’t want this opportunity to be scooped by the people who are already rich. This must benefit poor black people,” said Zondi.
Pierre de Vos, a legal expert, said those who stood against Discovery were fighting a losing battle.
De Vos said Discovery Bank’s critics were mistaken because the issue of redress could not be ignored.
“Those who wish to challenge the Discovery Bank scheme will not be successful in arguing that black people who join the bank will largely be middle class and are therefore not affected by unfair discrimination,” said De Vos.