Critics have likened KWV’s sale of a quarter of its shares to an empowerment consortium to filling rugby quotas with players from other sporting codes, and claim that instead of broad-based black economic empowerment (BEE), the deal “over-empowers” a select few in the black elite.
The Food and Allied Workers’ Union (Fawu), an affiliate of the Congress of South African Trade Unions (Cosatu), says the Phetogo empowerment consortium is dominated by the “Lucky 14” — comprising a number of BEE high-flyers, including e.tv boss Marcel Golding, who has also clinched the Golden Arrow Bus Service sale through his involvement with HCI and Mettle.
The union says few of the Lucky 14 has any background, experience or dealings in the wine industry or even agriculture more generally.
“We support BEE, but oppose the enrichment of the few and the over-empowerment of a handful,” said Western Cape Cosatu secretary Tony Ehrenreich. “They just legitimise the unequal and illegitimate farming practices … No one’s talking about land reform, it’s just ‘we are getting a piece of the action’.”
Cosatu is challenging the deal at the National Economic Development and Labour Council, and has issued a notice in terms of Section 77 of the Labour Relations Act, which allows registered trade unions or federations of trade unions to undertake protest action to promote and protect the social and economic interests of workers. The union has also asked the Master of the High Court to probe shareholding arrangements.
Fawu and Cosatu’s criticism of
the empowerment deal this week sparked urgent discussions between the Phetogo consortium, Fawu and the KWV Employees Empowerment Trust.
Phetogo met on Wednesday this week to discuss a possible reduction of its stake to make way for more worker representation through the KWV Employees Empowerment Trust.
Controversy has raged since early this year when details first surfaced about the deal, the first significant commercial BEE transaction in the multibillion-rand wine industry, where less than 1% of ownership is estimated to be in black hands.
The R200-million deal between KWV and Phetogo is being financed by the Industrial Development Corporation and the South African Wine Industry Trust (Sawit), which was established in 1998 as a public/private partnership with government to promote the wine industry and to assist small and emerging black farmers.
The unions have argued that the use of Sawit money to finance the deal was inappropriate, as the trust funds ought to be geared towards upliftment of workers and communities.
It has emerged, however, that Sawit recently amended its trust deeds to stipulate that 80% of its funding would be geared towards BEE transactions.
Fawu’s Western Cape secretary Barry Stemmet said the way the deal is currently structured meant that a good opportunity for real BEE had been lost.
This coincides with increasing Cosatu criticism of the number of black business people with high level links to the ruling African National Congress .
Sawit chairperson Gavin Pieterse feels the union’s complaints are ill-timed. “At the final hour when the funding is secured, suddenly there’s this uproar. If they had raised an objection earlier, we would have addressed this ages ago.”
He maintains that within the consortium there are a significant number of people with a wine background, as well as some with impeccable BEE business and management credentials.
Phetogo, whose offer has already been accepted by KWV, is headed by Victor Christian, a retired Cape Town-based chartered accountant.
The Lucky 14 and the Black Association of the Wine and Spirits Industry (Bawsi), comprise the majority partners. The remaining partners are the National African Farmers Union (Nafu Western Cape), South African Liquor Traders Association, EPA Development Group and Kumnandi Liquor and Leisure Investment.
The 14 include Carmen Stevens, South Africa’s first black woman winemaker; Anzill Adams, CEO of Lousivale wine farm and former Bawsi general secretary; and Khutso Mampeule, founder of the Johannesburg-based Thabang Wine Emporium.
Peter Volkwyn, who runs an IT company that successfully tendered to supply Parliament with equipment and cabling, was apparently chosen because he used to run a business in the United States importing and exporting South African wine.
In addition, at least two of the 14 are residents of Khayamandi, the township close to Stellenbosch in the wine heartland.
But some of the names have raised eyebrows in trade union circles: Kumnandi Liquor and Leisure Investment is headed by Old Mutual Gauteng CEO Khehla Mthembu and Gobodo Accountants and Forensic Services chairperson David Moshapalo. They hold a 51% stake in Kumnandi together with Wandile Ndlala, the owner of Soweto’s top tavern Wandi’s, and two others. The remainder of Kumnandi is held by 1 300 women-headed small businesses.
Following the union outcry, the door appears to be open for a stake in the KWV Employee Empowerment Trust in the empowerment transaction. Negotiations between Fawu, Bawsi and Nafu are under way to form a voting pool in favour of workers in the KWV deal.
This Friday KWV is expected to make a major announcement, after a week of high-level consultations with stakeholders including Minister of Agriculture and Land Affairs Thoko Didiza.
Meanwhile, the long-awaited and much-discussed wine BEE charter is expected to be finalised by the end of the year or early 2005.
What empowerment really means
The Broad-based Black Economic Empowerment Act was passed last year.
Purpose
To establish a legislative framework for BEE; to empower the minister to issue codes of good practice and publish transformation charters; to establish a BEE Advisory Council. To achieve the constitutional right to equality and promote the “economic unity of the nation”.
Definitions
Black means Africans, Coloureds and Indians. Broad-based BEE means empowerment of all black people including women, workers, youth, people with disabilities and people living in rural areas through:
increasing black management, ownership and control;
ownership and management of enterprises and productive assets by communities, workers, co-ops or other collective enterprises
HR and skills development
employment equity
preferential procurement
investment in enterprises owned and managed by black people.
Objectives
Meaningful participation by black people in the economy; broadening the entrepreneurial base.
Achieving a substantial change in the racial composition of ownership and management structures
Increasing the extent to which communities, workers and co-ops own and manage enterprises
Promoting access to finance for BEE
Broad-based BEE will be measured by substantial black participation in the economy as measured by ownership, management and skills development.