Bidvest and government slammed over Covid-19 donation
Johannesburg - Emerging entrepreneurs have slammed Bidvest for its Covid-19 protective gear donation to the Gauteng government, saying it denied them the opportunity to grow their businesses and create much needed jobs.
They also accused the service and distribution giant, which has a market recapitalisation of R50 billion, of using its personal protective equipment (PPE) donation to township schools to position itself for future government contracts.
This comes amid wrangling within President Cyril Ramaphosa’s Cabinet over whether or not to lift the ban on the sale of cigarettes and alcohol when the country moves to level 3 next month. Three commercial and tax lawyers Sunday Independent spoke to said Bidvest also stood to benefit from tax rebates and social responsibility investment scores which would boost its chances of getting government contracts.
The donation created a social media storm, with political analyst Ebrahim Fakir describing Bidvest as a “sophisticated version of the Guptas”. “Bidvest! Do you know Bidvest? Just a less abrasive, more poised, suave and sophisticated indigenous version of the Guptas,” he wrote on his Facebook page.
A letter emerged this week showing that Bidvest had offered to disinfect schools and give sanitisers free despite the government’s earlier announcement that it would give schools a budget to pay unemployed locals and entrepreneurs to render the same services.
According to the letter, Bidvest would supply 2 899 sanitisers and stands to 500 schools. “These will be wallmounted for ease of use and will cover the above mentioned 577 schools. We have allocated numbers to ensure that the grade 12 and 7 learners returning to school on June 1 are sufficiently covered. The sanitisers will be supplied by our subsidiary company Bidvest Steiner,” the letter read.
Musawenkosi Zulu, chairperson of the SMME Council, said the Bidvest donation was a sign that the government had sidelined emerging entrepreneurs in favour of big business. “We are not only disappointed, but we are very angry at our government because they are not only making a fool out of the SMMEs (small, medium and micro enterprises) but they are making a fool out of the citizens,” Zulu said.
“With Gauteng, the first thing we were angry about was that instead of working with independent schools owned by SMMEs, they worked with Curro. Now you have this which is coming as a donation. There is no such thing as a donation. You will have the government working with them again.”
Bidvest chief executive designate, Mpumi Madisa said the initiative was a donation to schools to assist the Gauteng Education Department ahead of grades 7 and 12 pupils returning to classrooms. “Bidvest is simply responding to the call made by President Cyril Ramaphosa to offer help in a time of need. Over 2 000 schools are rapidly preparing to re-open to welcome back grade 7 and 12 learners from June 1. However, of these, at least 577 schools have been identified as vulnerable. This means they cannot finance the sanitisation of classrooms and safety measures required for a safe return,” she said.
Madisa maintained the offer came at no cost to the provincial government. But Tshwane businessman Wisani Knox Khoza, who supplies PPE and renders cleaning and disinfectant services, said he was disappointed by the Gauteng government’s decision to accept Bidvest’s donation.
“It seems like you need to be politically connected to get such opportunities and if not, you won’t get much. If Bidvest partners with those small companies, at least, but how things stand, it seems like small businesses have no space in this country, to make money and to grow – which is demotivating,” said Khoza.
Tebogo Khaas, president of the Small, Medium and Micro Enterprises Forum, described the documents that were seen on social media as alarming. He said if the documents are correct then it raised a lot of questions regarding the “so-called donation”.
“The department said there was money set aside for SMMEs to do the work. We are interested in knowing who are those SMMEs and where do they belong. We have to always remain vigilant and alive to the fact that there have been instances where abuse of procurement processes have occurred under the guise of emergency procurement during the Covid-19 period.
“We can’t lose sight of the need to be vigilant and query. The department must share with the public and publish on its website the names of the SMMEs that benefited from that,” Khaas said.
He called on the government to follow due processes in the procurement of services during this period. “We would appeal to the government to resist the temptation to use underhanded tactics or deviate from the policies because of emergency procurement. Everybody knew that schools would be opening from the 1st of June. This means the government had ample time to advertise for those opportunities for SMMEs to take advantage of and bid for them. There are 14-21 days to make bids and that is worrisome to say why the rush,” he said.
Gauteng MEC for Education Panyaza Lesufi insisted that Bidvest Prestige had no financial benefits from their “social responsibility gesture” to the government. “There is no underhand dealing, a lot of corporates are responding positively to the government call for assistance.”
Lesufi says he wasn’t part of the company’s negotiations with his department and he also became aware of the deal when it went viral on social media. “I also got to know about the deal on Thursday morning when it went viral on social media and I summoned all my officials involved for a full briefing. I was assured there is nothing sinister about the whole deal.
“All the PPE procurements are done outside the department and there is no deal my department can offer them.”
Lesufi added that Bidvest wasn’t the only company that has come forward and offered some relief.
But lawyers have warned that Bidvest and other donors stood to benefit from tax rebates and improved chances of getting government contracts. Tax lawyer Tony Tshivhase said while the general rule was that donations to family members, organisations and churches were taxable, donations to institutions like schools which enjoy Section 18 A status are tax deductible.
“That institution will issue a tax exemption certificate, and that certificate you will use to claim a tax deduction. So I suspect most of the schools in Gauteng have got a Section 18 A status,” Tshivhase said.
Commercial lawyer Peter Tshisevhe said it was questionable that the Bidvest group can apply for Unemployment Insurance Fund (UIF) relief yet be willing to splash out millions in donations.
“The law states that if a company makes a donation to a public benefit organisation, it is entitled to a 10% deduction from their net income. If they donate to the solidarity fund, they are entitled to 20% deduction. If the amount donated is more than 10% net income then it is rolled over to the following year. If Bidvest donated directly to the department, they don’t deserve tax rebates as the government isn’t a public benefit organisation or NGO.”
But small business owners were left fuming. Jessica Thabete, who specialises in eco-friendly disinfectant and decontamination, said: “It is unfortunate we are overlooked for the big companies all the time. Yet on the other hand, we hire so many people who are unemployed. Government’s failure to consider us only to take away the opportunity is a painful experience,” she said.
Oyama Sidlabane, founder and chief executive of Lizwe Fuels and SDBNGroup, said the proposed plan was unfair. “The government is preaching ‘creating black industrialists’, then turns around and does exactly what they are against. It’s very hypocritical.”