The BBBEE codes specify ownership as one of the criteria for preferential procurement contracts for government tenders — ownership scores heavily in the evaluation process. Alongside black ownership, involvement and participation by designated groups, including ownership, are emphasised. These groups include people with disabilities, youth and women. The policy aims to alter South Africa’s business demographics.
The awarding of the tender by the South African Police Service (SAPS) to Medicare Tshwane, a company owned by Vusi Matlala, which was for all practical purposes, BBBEE compliant, exposes the systemic flaws of the economic empowerment policy as it is applied.
When Matlala resigned as director and appointed his sister, he enhanced the BBBEE status of the company. Despite Medicare Tshwane being fully black-owned, women-led and managed, the proper form and character of its empowerment credentials raise serious concerns about BBBEE.
Matlala asserted with conviction that Medicare Tshwane was not a BEE front company but a franchise with the right to be called 100% black-owned. Despite his admission that persons with no medical experience are owners of Medicare Tshwane, he argued that it met all the requirements of the tender specifications. The contract is, on paper, legitimate. The vulnerabilities of the BBBEE policy become evident as Matlala was at pains to argue his ownership credential as not fronting.
In his denial-admission-forgot theatrics during his responses to questions from the ad hoc committee, Matlala highlighted issues that should inspire citizens and BBBEE advocates to demand greater transparency and accountability in its implementation. The systemic flaws and deficiencies of the BBBEE policy were confirmed by the SAPS chief financial officer’s evidence at the parallel forum, the Madlanga Commission, when she argued the contract was legitimate.
Matlala’s Medicare Tshwane SAPS contract exemplifies a clear case of an imbalance between the free-market system on one hand and economic and social justice on the other.
Suppose the data William Gumede relied on in concluding that R1-trillion was transferred to 100 individuals as part of the BEE policy or strategy included transactions similar to the Vusi Matlala-Medicare deal. In that case, the correctness of his claim was either confirmed or enhanced at the hearings, and it will be nearly impossible to airbrush his claims.
The failure of more than 15 years of state-driven preferential procurement policies to have an impact on the templates of economic, and by extension socioeconomic, domination could arguably be attributable to several Medicare Tshwane-type transactions paraded as needle-shifting BBBEE transactions.
Medicare Tshwane became the front entity that hid other value chain and procurement decisions of the franchiser, a practice symptomatic of the dominant disgracefulness in the current BBBEE policy implementation terrains.
The failure of more than 15 years of state-driven preferential procurement policies to have an impact on the templates of economic, and by extension socioeconomic, domination could arguably be attributable to several Medicare Tshwane-type transactions paraded as needle-shifting BBBEE transactions.
Ordinarily, the outcome of the inquiry would recommend a deep dive into the workings of the BBBEE policy about how it contributes to the establishment of economic and social justice envisaged in the 1996 Constitution. The jury is out.
The questions society must ask as it redefines its relationship with fraud and corruption should be about the deeper BEE issues Medicare Tshwane has revealed. Addressing these concerns should change approaches required to pursue genuine economic justice rather than superficial compliance.
The resulting discourse should consider whether the BBBEE commission needs to be empowered to evaluate the policy’s actual impact and explore reforms that better align with South Africa’s objectives of economic justice and social transformation.
The accomplishment of regulatory tick-boxes is not enough; it merely facilitates the “gansterisation of the economy”, with the private sector as franchisers lording it over the entire value chain.
The Medicare Tshwane saga is evidence that government regulation, which is amply justified in principle, may go very wrong in practice if state-driven interventions are managed as means to achieve undefined ends rather than as ends in themselves within the broader economic and social justice transformation agenda.
The South African constitution is unambiguous in declaring that this democracy is about “improving the quality of life of all citizens and freeing the potential of each person … within a firmament of having recognised the injustices of the past”.
For opinion and analysis consideration, email opinions@timeslive.co.za
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