Dis­cov­ery sticks to its guns

Fi­nan­cial ser­vices group says al­lo­ca­tion of bank shares to blacks only isn’t racist; AfriFo­rum dis­agrees

The Sunday Independent - - METRO - LUNGANI ZUNGU [email protected]

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.

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