Something fishy about fishing trade companies
DURBAN - FISHING rights are under scrutiny after the Broad-based Black Economic Empowerment (B-BBEE) Commission has found African Tuna Traders, Umbhalo Trading and Homotsego Trading to have contravened the B-BBEE Act and referred the findings to the Department of Environment , Forestry and Fisheries for consideration.
The commission would also refer the report in this matter to the relevant parliamentary portfolio committee to consider this in relation to other rights allocated in the fishing industry, as there are concerns that may require a systemic approach to prevent recurrence in the future.
By the time of going to print, the Department of Environment, Forestry and Fisheries yesterday had failed to comment.
The Department of Trade, Industry and Competition (DTIC) spokesperson Sidwell Medupe said this week that an investigation had revealed that credentials of black employees were presented as black shareholders for the purposes of obtaining the fishing rights for African Tuna Traders, which currently traded in the fishing industry, with no participation or economic interest for the said black employees.
“Section 13A of the B-BBEE Act permits organs of state to cancel a contract or authorisation awarded on account of false information relating to B-BBEE status,” said Medupe.
DTIC said that Africa Tuna Traders’ former driver, Phephe Elias Khekhe, was the complainant. Phephe was employed from 2001 until his employment was terminated in 2010. He was also appointed as a director of Umbhalo Trading and Homotsego Trading, entities created by his employer, effective from August 2004 and on April 14, 2010, and November 24, 2014, respectively.
Medupe said based on records, Umbhalo Trading was allocated fishing rights for a period of eight years during the Long-Term Fishing Rights Allocation Process in 2005/2006, which expired on December 31, 2013.
In the 2013 Fishing Rights Allocation Process, African Tuna Traders and Umbhalo Trading were both allocated fishing rights on December 30, 2013, for a period of seven years in the Tuna Pole Fishing Sector, which would expire at the end of next month.
During the 2015/2016 Fishing Rights Allocation Process, Umbhalo Trading was allocated a right in the Large Pelagic Fishing Sector on February, 6, 2017, for 15 years, which would expire on January 31, 2032.
According to the application, Umbhalo Trading’s ownership was 20 percent held by African Tuna Traders and 80 percent by Homotsego Trading in which Khekhe and six other black people held 14.29 percent each as direct shareholders. Also stated was that the 80 percent held by Homotsego Trading would be transferred to Umbhalo Empowerment Trust whose beneficiaries would be black people. However, such a transfer did not materialise.
In practice, all three entities were operated by members of African Tuna Traders Jonathan Ronald van Breda and Christopher Fergus Hamel, with 50 percent members’ interest each without the participation of and/or economic interest to black people, who were presented as shareholders in the applications.
The commission said that African Tuna Traders had a 0 percent black ownership while the said black-owned Homotsego Trading was dormant and did not have any financial statements.
Both Umbhalo Trading and Homotsego Trading were created as empowerment companies, but had no employees, with the administrative functions for Umbhalo Trading being performed by African Tuna Traders.
African Tuna Traders was said to have stated that the only revenue of Umbhalo Trading was from the licence fees charged to other related companies on the basis of the fishing rights it held.
Medupe said the African Tuna Traders, Umbhalo Trading and Homotsego Trading engaged in conduct that was contrary to the B-BBEE Act that would amount to a fronting practice.
The regulator said that the white members of African Tuna Traders who operated the entities and controlled both the operations and finances, and the creation of Umbhalo Trading and Homotsego Trading presented a typical opportunistic intermediary arrangement in that Umbhalo Trading used to secure rights/licences to operate in the fishing industry for the benefit of African Tuna Traders.