Johannesburg - A complaint of BEE fronting has been launched against medical giant Netcare at the BEE Commission for what an empowerment company feels is a breach of contract.

Milagros Social Development, a company whose shareholders are all black women, laid the complaint on Friday against Mother and Child Trust (MCT) - a company registered by Netcare in 2005 as part of its BEE scheme, Health Partners for Life (HPFL).

Milagros was selected as the anchor beneficiary of MCT, one of four BEE trusts registered under the HPFL transaction.

Milagros alleges that MCT broke the conditions of the transaction by refusing to pay it the three vestings - or the rights that beneficiaries have to the income or assets of a trust - in the months of November in 2014, 2015 and 2016.

This was after Milagros was awarded 2 million trust units linked to a corresponding number of Netcare shares at R12.76 a share, with a loan of more than R25million provided by the medical giant in which the shares were locked from 2008 to 2012.

Thereafter, 20% of the shares could be disposed of through a sale - the beneficiaries could choose to sell or transfer the shares to their personal brokers - and the net proceeds of which would be paid out to the beneficiary after a deduction interest, among other deductions.

Milagros said it received the vesting for 2012 and 2013, but not for the next three years, which is why they allege fronting.

According to the Broad-Based Black Economic Empowerment Act, fronting loosely involves the proceeds of a transaction not flowing to black people in the ratio specified in the relevant legal documentation.

Milagros founder Masingita Masunga told The Star that the trouble started when MCT head Peter Warriner allegedly changed the conditions stipulated in the letter of award, where Milagros was now expected to bring social development projects it was involved in before the disbursements could take place.

“They say we have to bring projects to them so that they may approve the projects. It seems like they will only give us the shares when we bring to them the projects we want to undertake. And that is not in the letter of award, nor is it in the trust deed,” Masunga said.

The Star has seen a copy of both documents.

She added that her company tried to reason with Netcare's chief executive, Richard Friedlander, but he allegedly kept referring them back to Warriner.

“And this person (Warriner) just keeps on giving us the run-around, saying we’ll meet and discuss a settlement, but when we send an e-mail, he says we’ll only get the settlement once we do the project the trustees want us to do,” she said, adding that they could not pay shareholders in the meantime.

She said they were hoping for an amicable solution, even though their complaint states that the directors and “some shareholders want damages for emotional distress and hardship endured”.

Netcare spokesperson Martina Nicholson said the company could not comment last night as the request was received late. She did, however, say comment would be provided on Tuesday.

The Star