empowerment fronts’
Black security companies have won contracts amid claims of being fronts for white firms, reports Ann Eveleth
RAILWAYS parastatal Spoornet is handing a huge slice of lucrative security work to a company linked to contracts currently under investigation by the Office for Serious Economic Offences (Oseo).
Spoornet, a subsidiary of Transnet, said this week that a new company, Bayete Security, was winning much of the work it is giving black-owned firms in its drive to favour previously disadvantaged entrepreneurs.
Bayete was formed seven months ago after a management buyout of SSH Security Services, with funding provided by a listed black empowerment group, Umbono Investments.
Oseo is investigating past contracts that Spoornet awarded to SSH and several other private security companies after an internal probe suggested fraud running to at least R100-million. SSH guards were also involved in the stampede at Tembisa station on the East Rand last year, in which 16 people died. An independent inquiry found that the guards’ decision to use cattle prods on the crowd helped to spark the tragedy.
Bayete director and legal adviser Coenie Fick declined this week to say whether the company could be held liable for any findings against SSH. “Bayete is not SSH,” he said. “Bayete bought out SSH and SSH no longer exists.” He added that SSH management had told Bayete at the time of the deal that it had “nothing to hide”.
Spoornet security officials said this week they had not seen the internal fraud inquiry, and so did not take its findings into account when allocating work. “We have never seen the report, so the dilemma is not ours,” said Spoornet’s deputy security chief, Alfred Woodington.
“The dilemma is with the people who commissioned the report.”
The report, by forensic auditors Steve Ochse & Partners, was commissioned by Transnet’s chair, Louise Tager, in May 1995. Its findings were reported by the Mail & Guardian earlier this year, just as Oseo was called in.
Tager also refused to comment this week, saying that the report – which boils down to the alleged misuse of taxpayers’ money – is a “private, internal investigation. When the litigation and the whole process is complete, I assure you everybody will know about it.”
Bayete’s new position in the market emerged amid allegations from other black-owned security companies that white companies are using black empowerment “fronts” to win contracts.
The money at stake is large. In the last six months, Spoornet has handed out new security contracts worth more than R56-million. Sister company Metrorail has handed out work worth R136-million in the same period.
Transnet’s figures show the black-owned companies and black empowerment joint ventures now enjoy the lion’s share of the work, with white security companies suffering harsh cuts in their allocations.
But the South African Black Security Employers Association broke off talks with Transnet last month over the failure of its members to secure contracts.
The association said successful tenderers are “nothing but fronts or window-dressing of the old companies that have been rendering services to Transnet for years”.
The association handed a 10-page dossier to Transnet executives, alleging that Spoornet officials cited in the Ochse report were favouring certain companies, and that seven companies claiming to be black-owned to win work were actually white.
“You can’t get a contract with Transnet unless you link up with these white companies,” the association chair, Steven Dube, said this week.
The association plans to march against Transnet’s tender policies this month, and is demanding Transnet fire its group security manager Gert Britz, audit chief Nigel Payne, and Spoornet security head Brigadier David Moore. Britz and Moore were cited by the Ochse report for various alleged conflicts of interest.
Both men denied the allegations and rejected the association’s claims. They conceded, however, that the lack of clarity around the report may have fuelled the association’s fears that its members had been sidelined.