Top recruitment and labour brokering firm Kelly Group is facing allegations of fronting and cooking employment equity figures for classifying black people awaiting placement opportunities as suppliers of goods and services in a bid to inflate its empowerment status.
It is alleged that the JSE-listed company was, as a result of the alleged fronting and incorrect employment equity reporting, listed as a level-three contributor in its 2009 empowerment rating, when it was at level five, according to a leaked confidential report by independent consulting firm Borena Consulting.
The Broad-Based Black Economic Empowerment Gap Analysis report is the subject of fresh misconduct charges brought against suspended deputy chief executive of the group, Mthunzi Mdwaba.
The Sunday Independent has learnt that in addition to charges of dishonesty, gross insubordination, gross misconduct and bringing the company into disrepute, Mdwaba has been slapped with new charges for commissioning the damning BEE report and billing the Kellly Group for unauthorised travel expenses.
The Kelly Group initially instituted disciplinary action against Mdwaba in August for allegedly not disclosing his interests in several companies and judgments against him.
It is understood that in the first week of this month, Mdwaba was given new charges. He was accused of having irregularly appointed Borena Consulting in September last year. Mdwaba was charged with commissioning the report at a cost of R233 700 without authorisation.
He has also been accused of commissioning Aston Chalmers and Ashleigh Prentice as consultants to create and produce a coaching model business plan for the Kelly Group at a cost of R710 400, when such expenditure was not budgeted for.
In addition, Mdwaba was charged with dishonesty or gross negligence for claiming travel expenses of R61 020 and R35 864 for travel and accommodation for trips to the International Labour Organisation (ILO) in Geneva in March. Mdwaba is a member of the ILO committee on decent work.
He was charged for having e-mailed or “caused” a letter to be e-mailed to Kelly Group directors, supposedly written by Elias Monage, the company’s human resources director, which allegedly denigrates Kelly Group chief executive Grenville Wilson and Monage himself.
He will have to explain his actions when arbitration proceedings begin next month.
However, if the Borena report is to be believed, the Kelly Group has some explaining of its own to do. The report found that the group was listing black workers who were on its database for placement under “preferential procurement” – creating the impression that the company was procuring services from a significant number of black companies.
“There is no basis for this and we strongly recommend that the group refrain from this practice. Our view is that the placement of individuals is a product of the Kelly business, and not a procurement activity,” the report said.
In the 2009 analysis, the consultancy noted “various gaps” and alleged that the firm’s real BEE contributor status is “significantly less than the reported level-three contributor status. It is at level five contributor status.
Borena also reported that the Kelly Group’s employment equity report is “inaccurate and does not reflect the actual organisational make-up”.
The report deals with issues of transformation and says the company’s senior and middle management levels are “untransformed”.
“There is a significantly high number of white males, followed by white females at these levels. The number of black managers is not sufficient to meet the set minimum.”
The report noted that Kelly could achieve level-two status in the 2010 financial year, which it has, and by 2011 progress to level one. But the Borena consultancy warned of future problems.
“We strongly advise that management correctly align the transformation activities and processes within the group to the current contributor level before proceeding to level one.
“At level one, the group will receive increased public attention which may also expose the company to scrutiny by competitors and other stakeholders.”
Borena also took issue with the Kelly Group’s employment equity score, saying points were allocated incorrectly, putting the score at 9.4 when it should be 3.4.
“The calculation of the employment equity score has been based on the employment equity report prepared by the human resources department annually… We found that the report is inaccurate. We also found the report to have inconsistencies and contradictions.”
Asked about its empowerment credentials, the Kelly Group provided The Sunday Independent with a report compiled by rating firm Empowerdex.
Asked why the Empowerdex report put Kelly Group’s business development director, Connie Motshumi, on the level of “senior top management” – the same level as chief executive Wilson – the Kelly Group referred The Sunday Independent to Empowerdex.
This newspaper understands that Motshumi is not at the same level as Wilson. Instead, she reported to Mdwaba, who is listed in the Empowerdex report as “top management”.
Asked for clarification, Kelly Group representative Frank du Plessis said the firm “was not going to say anything further”.
The company has denied reports of targeting black executives, saying these allegations are “entirely without foundation and without any merit whatsoever”.
It would not respond to questions about Mdwaba’s suspension. Mdwaba also declined to respond to numerous questions, saying his lawyer had instructed him not to speak to the media.
He did, however, say: “I will fight tooth and nail to clear my name and will stop at nothing, but will only talk when my time comes post the arbitration.”
It is understood that Mdwaba and Wilson have clashed on numerous occasions over the future running of the group.
It is understood that when Mdwaba sold his controlling stake in Torque IT to the Kelly Group, he was next in line as chief executive.
The board nominated him in July, but by August relations had soured as a result of judgments against him which he was unable to settle in time.
Two of his allies, Motshumi and Lumka Gallant, have since been disciplined by the firm over alleged fraudulent travel claims. Gallant has since been dismissed over a R363 discrepancy in a mileage claim.
Motshumi is also facing charges of gross misconduct over the alleged non-disclosure of companies, which The Sunday Independent understands she has denied. - Sunday Independent