MTN and the illustrious BEE Commissioner. Who has the bigger pair here - unlikely to be MTN

South Africa is not a country to shy away from incompetence.  The ANC government has relished its incompetence, it thrives to promote and encourage incompetence.  Think Panyaza Lesufi who wants to bring all the schools in Gauteng down to a level where everyone is academically equal - thereby ensuring that any type of excellence is actively discouraged.  This is all in the name of  transformation.

Many, especially me, are somewhat amused by the extraordinary incompetence demonstrated by our current public protector.  Our busi has taken incompetence to levels that the ANC could only have anticipated in their wildest dreams, she must be the darling of the illustrious movement.  In spite of my very strong anti-ANC sentiment, I firmly believe in Cyril.  I believe that he can save the country, even after the white monopoly capital has fled with all its monopoly capital leaving Malema and co with monopoly money and plenty of unusable land.

Back to incompetence. Perhaps this is a bit harsh, the BEE Commissioner, the awesome awdoz aka Zodwa Ntuli hasn't been declared officially incompetent but I don't think she's too far away from that allegation.  Our transformation traffic warden has now declared that MTN's Zakhele-Futhi Scheme contains "elements of fronting".

as a consequence, the transaction in its current form contains elements of fronting, in that the black shareholders and directors of MTN Zakhele-Futhi (RF) Limited, are restricted or inhibited from participating in the activities of MTN Zakhele-Futhi (RF) Limited, and consequently of MTN Group Limited and MTN South Africa (Pty) Ltd, which are at odds with the requirements of the B-BBEE Act.

MTN naturally denies this

3.2 MTN Group Limited has in its response to preliminary findings provided for in regulation 15 (13) of the B-BBEE Regulations expressed that it disagrees with the findings to the effect that the MTN Zakhele-Futhi Transaction constitutes a fronting practice or otherwise contravenes the B-BBEE Act, and stated further that it considers the MTN Zakhele-Futhi Transaction to comply with both the letter and the spirit of the B-BBEE Act, the then applicable B-BBEE ICT Sector Codes and the amended ICT Sector Codes promulgated on 7 November 2016.

3.3 MTN Group Limited provided reasons to substantiate their responses, which were further interrogated and discussed in a meeting prior to final findings being issued by the B-BBEE Commission.

This denial, which  was bolstered by their legal advisers, was dismissed. I think that we need to understand that the legal advice MTN got is probably the most expensive and competent in the country (unlike Daniel Mantsha who is probably just expensive).  It's very unlikely that there are even insinuations of fronting in this scheme.  However the awesome chooses to differ.

She's found that there are elements of fronting.  How do you get "elements of fronting"?  Fronting is fraud, rather like pregnancy - you are either pregnant or your are not, you can't be half pregnant.  If fraud is an intent crime then you can't half commit fraud.  You are either fraudulent or you aren't. If a small element of what you do (like a massive BEE deal) is based on fraud, then the whole thing is fraudulent.   I've written a lot about this - here's a useful overview.

Keeping with her standard MO, the awesome has dictated a number of remedial processes that MTN needs to implement within a short period of time, think of this as some sort of admission of guilt fine.  Some of these make sense.  However the real issue with the commission is that they are in effect bribing MTN to implement these recommendations, if they fail to do so then the commissioner will consider the following

1. refer the MTN Group Limited and its directors on the basis of B-BBEE fronting and/or misrepresentation of B-BBEE status to the appropriate division of the South African Police Services or the National Prosecuting Authority
2. consider instituting proceedings in court to restrain any breach of the B-BBEE Act, including seeking an order to declare the B-BBEE transaction of MTN Group Limited a fronting practice or invalid, declare their current B-BBEE certificate invalid, and/or to obtain appropriate remedial relief, in terms of section 13 J (4) of the B-BBEE Act;
3. refer findings on this matter to National Treasury for the purposes of invoking processes outlined in the Preferential Procurement Policy Framework Regulations, or enter MTN Group Limited and MTN South Africa (Pty) Ltd, in the register of tender defaulters,
4. refer the matter to the Independent Communication Authority of South Africa (ICASA) for an investigation of the conduct of MTN Group Limited and its directors and to recommend withdrawal of its licenses through its operating entity MTN South Africa (Pty) Ltd
5. refer findings to all organs of state and public entities to consider their discretion to cancel and contracts, awards or authorisations awarded to MTN Group Limited

This is illegal.  If the commission is of the opinion that MTN has committed the crime of fraud, they MUST lay a complaint with the SAPS.   They are now accessories to this crime.  The awesome and her crew cannot allege then attempt to bribe their way out of this.  This is no different to paying off a traffic cop.

I suspect that MTN is aware of this anomaly.  But as Johann Rupert said in response to a statement made by the self righteous and awful Iman Rappetti that he came across as racist, "how do you come back from that".  It's a last ditch insult and allegation that you cannot deny because the alleger has stated an irrefutable matter of fact.

 

This fact cannot have escaped MTN, because fronting allegations are cut from the same cloth as racism allegations.  The only option that MTN could possibly have is to call the commissioner's bluff and insist that she lay that charge with the NPA and SAPS.  

Herein lies the rub.  Does MTN have the corporate balls to do this?BEE   Their argument against fronting is inevitably much stronger than the commissioner's allegations of them fronting, they have a greater litigation budget (the commissioner has no budget) and will hire much better lawyers.  They probably don't have the balls to do this, they are like most of the large corporates in South Africa who kowtow to arbitrary policy making.   If this country is to succeed then we need more Magda Wierzyckas.  I am quite sure that Johann Rupert is another person who is willing to stand up to the government - but we've pretty much lost him anyway.