By Roy Cokayne for IOL

The South African Bureau of Standards (SABS) has been placed under administration.

This is after Trade and Industry Minister Rob Davies last month removed the entire SABS board because he had lost faith in its ability to effectively manage the bureau.

In May this year, Davies confirmed that the bureau was bleeding customers and potential revenue and in March this year he instructed its management to urgently oversee a detailed process to develop a turnaround strategy.

Davies on Friday announced the appointment of three SABS co-administrators, SABS group operating officer Jodi Scholtz, the deputy director-general of the Industrial Development Division at the Department of Trade and Industry (dti) Garth Strachan, and the chief director of technical infrastructure institutions at the dti, Tshenge Demana.

He said the co-administrators were charged with producing a diagnostic report and turnaround action plan.

They hade been appointed for the period from July 2 this year until January 30 next year and in terms of the provisions of the Public Finance Management Act, they had been given all powers and duties necessary or incidental for the proper functioning of the SABS. Sidwell Medupe, a spokesperson for the dti, on Friday confirmed that SABS chief executive Boni Mehlomakulu, who as chief executive was a member of the bureau’s board, had been dismissed as a board member, along with the other board members. Medupe also confirmed that Mehlomakulu now reported to and took instructions from the co-administrators.

The SABS last year reported a R44.3 million loss for its 2016/17 financial year.

The SABS has been in the spotlight since it emerged that it irregularly certified substandard coal by Guptalinked mines to facilitate the suspension imposed by Eskom on another supplier to pave the way for the Gupta-owned Tegeta contract to go ahead.

However, the problems at the SABS go much deeper than that and it has received widespread criticism in the past few years from many industries about the level of service these industries were receiving from the bureau.

Business Report reported in January last year that South Africa’s coatings industry claimed the SABS’s paint testing laboratories appeared to be non-operational.

The Master Chemical Blenders Association, which collectively represents more than 50 companies, last year told Business Report that their members were unable to get their compliance certificates from the SABS, despite interacting directly with Mehlomakulu and that the SABS did not have testing capability and that many were possibly no longer compliant.

The SA National Accreditation System (Sanas), which is responsible for accrediting industry bodies and laboratories that conduct testing and is recognised through legislation as the only national body responsible for carrying out accreditation, suspended the certification programmes of the SABS, but subsequently lifted this suspension in March 2016, claiming the suspension was of an administrative nature.

Complaints Many other industries have complained to Business Report about the level of service provided by the SABS. Davies last month confirmed that he had received many complaints from both big and small business, including complaints from black industrial players, that the government was working hard to expand, about the lack of service from the SABS.

Davies confirmed in response to a parliamentary question in May that the SABS had lost 1 052 customers since its 2015/16 financial year, including 401 customers since April this year, resulting in a loss of revenue to the bureau of almost R50m in this period.

In addition, the SABS had to refund 41 customers a total of R1.03m in this period.

Davies said the peak in customer losses was in the SABS’s 2016/17 financial year, due to customers cancelling their permits and certificates with the SABS.

The reasons for the cancellations included the suspension of SABS certification programmes by Sanas; customers moving to competitors; and expired certificates and permits.

Debit order disputes on the rise

By Carin Smith for Fin24

Debit order disputes have increased significantly over the last three years, according to the Payments Association of South Africa (PASA).

Yet, it said recent investigations have shown that in the majority of cases, proof that debit orders were indeed authorised by consumers could be provided.

According to PASA, the increase in debit order disputes could mean that companies have bad practices in obtaining such debit order mandates, or that consumers are asking their banks to reverse actual valid debit orders.

Consumers could be doing this, because the reversal of such legitimate debit orders creates temporary cash flow relief for them. PASA emphasises however, that this kind of behaviour by consumers is not acceptable and has become a huge concern for the financial services industry.

As part of a project to reduce debit order disputes, banks are investigating ways to enhance their current dispute and prosecution processes.

Over the last few years PASA has been working with banks to address debit order abuse. Initiatives include – statistically identifying potential problematic companies, refining the minimum criteria for mandates, and managing a debit order abuse list which can result in “rogue companies” being excluded from the system.

Initiatives also include a process to investigate and issue fines or initiating forensic investigations and prosecution when companies do not have mandates or have mandates that do not conform to minimum requirements.

DebiCheck

One of the most pertinent, but longer-term solutions to curb debit order abuse remains the Authenticated Collections project that was started in 2013.

Now close to implementation, the project will deliver a new type of debit order, called DebiCheck. Currently there are 11 banks participating in DebiCheck. Through this new debit order system, a debit order will only be processed to a consumer’s account if the mandate for such a debit order has been electronically confirmed by the consumer.

This means that consumers will be aware of which DebiCheck debit orders will be processed to their accounts – and these debit orders will not be processed by the bank if they are outside the agreed conditions the consumer initially confirmed.

As a result, PASA foresees that the number of invalid debit orders being processed as well as the number of consumer disputes where valid mandates are in place will rapidly decline.

Improving safety and efficiency

Additionally, an interbank committee has been established and mandated to improve the safety and efficiency of debit orders. This is through including new ways to better identify existing users abusing the system, enhanced measures and support to ensure offenders are adequately investigated and prosecuted, and processes that will assist in curtailing improper consumer behaviour.

PASA says consumers continue to have the right to dispute or instruct their bank to reverse debit orders they have not agreed to, or which are processed outside the mandate they have given.

They should continue to be watchful when entering into contracts – verbally, in writing or electronically. PASA also encourages consumers to check their bank statements on a regular basis. Also, not to provide or confirm account information if they are not certain what exactly it will be used for.

The industry is currently involved in the prosecution of certain rogue collectors. PASA believes the new measures it is working on will significantly assist the authorities and improve the success of prosecution.

Source: BusinessDay 

Media24 has announced it is ending its publishing arrangement with global internet media brand, HuffPost.

In a statement on its website, HuffPost SA said: “Today Media24 and HuffPost announce plans to mutually end its SA licence.”

The company said it was a routine decision and was being made despite “strong” audience numbers because advertising revenues were “challenging”.

The statement quoted Esmaré Weideman, CEO of Media24 saying: “We regularly review our portfolio of brands. The HuffPost SA audience numbers are strong and consistently hold steady on the list of top-10 news sites in SA. HuffPost SA was an important new voice in South African journalism and attracted a fresh new audience.

“Advertising revenues for HuffPost in SA have, however, been challenging. As an innovative and responsible business, we will continue to respond effectively to the market’s needs and explore new digital opportunities.”

The story said staff members were “being consulted”.

Paper, packaging and graphic solutions provider Antalis South Africa has announced that the company will become South Africa’s leading black empowered company in its industry, on completion of a 100% local buyout of shares currently owned by Antalis International.

Antalis South Africa has a net asset value exceeding R200-million and an annual turnover of over R1-billion. In the process of divesting from South Africa, Antalis International sold all its shares to two existing Antalis South Africa directors. The company will continue to trade as Antalis South Africa.

Following the buyout, the entity becomes an entirely South African owned company that is 51% black- and 30% black female-owned. Antalis South Africa’s B-BBEE maximum procurement recognition level will enable the company to partner with government, state-owned entities and other organisations that prioritise South Africa’s transformation agenda.

The new shareholder team comprises Antalis South Africa’s existing financial director Neelesh Kalidas, who will serve as joint managing director. Together with his business partner they will own a combined 51% of Antalis South Africa, with a 30% black female shareholding.

Raymond Waldeck, currently managing director of Antalis South Africa, will hold the remaining 49% of the company, and will also assume the role of joint managing director.

Each managing director will concentrate on business functions specific to their core strengths for operational efficiencies and market optimisation.

“Kalidas and Waldeck realised that the buyout opportunity presented by Antalis International would result in the formation of a truly empowered South African entity. Together with our 320-strong team, we will continue to serve existing and new customers with excellent service, innovative product ranges and industry expertise that Antalis customers have come to expect – elements that are critical to the ongoing success of the business,” says Romano Daniels, spokesperson for Antalis South Africa.

“Antalis South Africa will continue to be a reputable contributor to the local paper, packaging and graphic solutions market, just as it has been for over 120 years. We are proud to lead meaningful transformation of the industry that is long overdue, with this transaction.”

With an eye firmly on how digitisation and shifts in the commodity markets are changing the pulp, paper, and packaging trade worldwide, Daniels confirms that Antalis South Africa aims to continue increasing its focus on market opportunities in packaging, graphic equipment, visual communications, inclusive of signage and display as well as logistics services.

“As the global demand for commodity paper changes, established businesses like Antalis South Africa, who has the widest offering in the market, are taking advantage of technological advances that create opportunities for new services, innovative product developments and overall industry growth,” he says.

He notes that the increasing impact of environmental consciousness is bringing about new developments in paper packaging as an example of how changing consumer outlook and demand has benefited, rather than threatened, the paper and graphics solutions sector. Furthermore, Antalis South Africa will continue strengthening its ties with key global suppliers to ensure the organisation is always at the forefront of new product introduction to the market.

Daniels says that in the meantime, staff, clients and suppliers will find that business continues as usual because business stability is of critical importance to customers and staff alike.

“This is an exciting new chapter in the Antalis South Africa life cycle, and as an influential, sustainable and transformed South African company, we look forward to being at the forefront of the continually-evolving local paper, packaging and graphic solutions industry,” he says.

Source: IOL 

Edcon Holdings said on Thursday that it will be closing three of their chains: Boardmans, Red Square and La Senza lingerie.

This is the latest strategy to save the company after dwindling sales and profits.

By shutting down the other chains they hope to attract more customers to their flagship Edgars stores.

The decision to shut down certain chains comes from the newly appointed CEO Grant Pattison who took over the position fro Bernie Brookes. Edcon is South Africa’s largest non-food retailer.

The Johannesburg company has had a hard time staying afloat amid weak consumer spending and economic growth and in 2016, the company had to be taken over by banks and bank holders to stop it from collapsing.

Under Pattison’s plan, Edgars will cut down on more than 1 300 stores’ footprints as well as reduce floor space by 17% over the next five years to increase profitability.

They will also be focusing on Edgars mainly, which sells most of the of the items that are available in the stores that are being shut down.

Other stores that have made the cut include CNA and Jet.

Pattison said that he thinks that the company can turn. He said, “The quicker we can do this, the better”.

Debt

The urgency to make changes comes after Edcon retail sales dropped by 9,4% in three months through December 23 while adjusted earnings before tax, taxes depreciation and amortisation declining by 25%.

The owners of Edcon Holdings are Frank Templeton Sanford C. Bernstein & Co. LLC and Harvard University Pension Fund. They took over when Edcon was struggling under foreign-currency debt that was used to finance the takeover by Bain Capital Private Equity LP in 2007.

The 89-year-old company also employs 14 000 permanent a significant number in a country where more than 1 in 4 people are unemployed.

At the of last year, the company’s net debt was R4,2 billion. Some of the other attempts to revive the company include increasing the workforce, decreasing prices and bringing in international brands.

Edcon said earlier this year that they were in talks with creditors about refinancing debt to strengthen the balance sheet. Edcon also has liquidity facilities and credit facilities that will be maturing towards the end of 2018.

By Warren Thompson for Business Day 

The South African Reserve Bank painted a grim picture on Monday that suggests as much as 75% of VBS Mutual Bank’s assets may have been stolen by its executives and directors.

“It’s a travesty that the failure of management put so many depositors at risk,” said Bank governor Lesetja Kganyago, at a media conference on the curatorship of VBS.

“Institutions such as banks rely on the governance processes, but when it’s the people responsible for the bank that are the ones perpetrating the crime, no amount of regulation can prevent that,” he said.

VBS, which was formed as a building society in the former Venda homeland, came to national prominence in 2016 when it gave former president Jacob Zuma a R7.8m loan after he was ordered to repay the state for upgrades made to his Nkandla home.

The bank’s failure may yet have grave consequences for municipalities in some of the poorest parts of the country, which stand to lose almost all of the R1.6bn they deposited with VBS, increasing the risk of budget shortfalls and violent protests that could result from a lack of service delivery.

Curator Anoosh Rooplal’s timing of the action he instituted on Friday to recover more than R1.5bn from the bank’s largest shareholder, Vele Investments, as well as from the bank’s executives and directors, was done to prevent further “dissipation of assets”.

But the amount of money stolen relative to the bank’s total assets is harder to establish, partly because the bank deliberately misled the regulator and also due to problems with the quality of its audit, which led the bank to withdraw its 2017 financial results.

Rooplal did not rule out seeking damages from the bank’s external auditor, KPMG, and the bank’s internal auditor, PwC, when the forensic report is completed towards the end of August.

According to the bank’s last available annual financial statements to end-March 2016, the bank had total assets of just more than R1bn.

By the end of January 2018, according to data provided by VBS to the Reserve Bank, the bank held total assets of R2bn, meaning it had doubled its balance sheet in the space of two years.

When asked what, if any, part of VBS’s loan book was performing, the curator said that the home loan mortgage book of about R400m was behaving consistent with credit extended under arms-length credit agreements.

The performance of the vehicle finance book was mixed, with the curator noting a deterioration in the credit quality in the months leading up to the intervention by the Reserve Bank.

Based on a balance sheet of about R2bn, and with the curator seeking to recover R1.5bn from the “perpetrators of the fraudulent scheme”, it seems possible that as much as 75% of the bank’s balance sheet has disappeared.

Retail deposits

But there was relief for small depositors, with the Reserve Bank announcing that it has obtained a guarantee of R330m from the Treasury should it fall short in recovering the money owed to them.

The Bank announced last week that retail deposits, which include individuals, burial societies and stokvels, would be guaranteed to a maximum of R100,000 per customer.

This means that 97% of all depositors at the bank will be refunded their entire savings.

Business confidence worse than in 2017

By Asha Speckman for TimesLive

The economy was unlikely to shake off anaemic growth in the second quarter of this year‚ economists said on Tuesday after a dip in the South African Chamber of Commerce and Industry (Sacci) Business Confidence Index confirmed their concerns.

The Sacci Business Confidence dipped to 93.7 index points in June from 94 index points previously. The index has slipped each month from a high of 99.7 in January this year.

John Ashbourne‚ Africa economist at Capital Economics said: “The latest drop strengthens our view that South Africa’s economy remained weak in quarter two.”

Economic growth contracted by 2.2% in the first quarter of this year after a stronger finish in 2017.

The Sacci index is a measure of business activity and is based on several indicators including energy production‚ trade figures and the performance of financial markets.

Seven of the thirteen sub-indices reflected negativity in the business environment.

The largest negative influences were the weaker rand exchange rate‚ lower real retail sales‚ a decline in the value of building plans passed and higher energy costs.

A rise in merchandise import and export volumes and new vehicle sales impacted positively.

The risk of a global trade war and potential knock-on effects also weighed negatively on the outlook from certain industries in South Africa‚ the survey noted.

Ashbourne anticipated further clarity when mining and manufacturing production and sales data for May are published on Thursday.

Weakness in these sectors is‚ however‚ expected to continue. The recent Absa purchasing manufacturer’s index‚ which measures activity in the manufacturing sector‚ dropped to 47.9 index points in June from 49.8 in May.

The index reading was 50.9 in April. A reading below the 50 neutral mark indicates a possible slowdown in business activity.

Lara Hodes‚ an economist at Investec‚ said about second quarter growth: “We’re not expecting positive news.”

Hodes said growth in mining was tempered by continued uncertainty over the mining charter and a restrained investment.

Investec expects an improvement to -3.5% for mining in May compared to -4.3% previously. It has forecast manufacturing to be -1.4% from 1.1% in April compared to a BNP Paribas expectation of 0.1% growth from 1.1% previously. However‚ Hodes said retail trade sales and consumer confidence data to be released next week would complete the picture.

Ashbourne said the potential slowdown had prompted London-based Capital Economics to temper its growth forecast for the year to 1.3% from 2% previously.

National Treasury has forecast 1.5% for the year and the Reserve Bank expects 1.7%.

Sacci said: “It has become imperative that structural economic matters hampering inclusive economic growth should be addressed with economic rationality. Uncertainties surrounding economic policy direction and position should be clarified so that investor and business confidence can reaffirm itself.”

By Roxanne Henderson and Antony Sguazzin for Business Day

The Reserve Bank has written to the National Credit Regulator requesting a probe of loan-origination fees charged by Capitec, according to a person familiar with the matter.

The referral came after the issue was raised in a report by short-seller Viceroy Research in January, said the person, asking not to be identified because the matter is private.

The investigation is ongoing, the person said.

On Tuesday, Capitec shares were trading down 1.9% at R870.89 at 9.05am on the JSE.

Capitec chief financial officer Andre du Plessis said he was unaware of the central bank’s referral, or of an investigation by the Johannesburg-based credit watchdog.

In the report, Viceroy said Capitec’s income was boosted by excessive fees on its multiloan product, which carried a monthly charge for allowing a previously vetted customer to extend their facility by answering some questions.

While Capitec said it terminated the product in 2016 — after rules introduced by the NCR meant it was no longer viable — Viceroy said the lender rebranded it and that Capitec’s methods risk over-indebting consumers.

Capitec denied this, saying Viceroy did not understand how the product or its processes work.

The NCR had previously probed the multiloan facility and was satisfied with the fees and interest charged, Capitec said on February 8.

‘Very active’

Both the Johannesburg-based NCR and Pretoria-based central bank declined to comment.

The central bank monitors lenders for their compliance with rules ranging from their operations and capital levels to staffing and money laundering, with the ability to fine companies or revoke their licenses. The NCR can also administer financial penalties on lenders which violate the National Credit Act, legislation aimed at protecting consumers from becoming over-indebted.

Officials from the central bank and the NCR told MPs in March that many of the allegations made by Viceroy were not new and that not all of them were accurate.

“The Reserve Bank is very active in doing ongoing reviews at all the banks,” said Du Plessis, speaking more broadly on the regulator’s oversight. “If anything bothers them, they actually contact us or ask that we report on something. That happens on an ongoing basis.”

On Friday, Capitec announced it had reached an agreement with Summit Financial Partners, which was challenging the lender in court and before the NCR on behalf of six complainants.

The cases, which mostly centred on Capitec’s now defunct multiloan facility, were withdrawn.

Capitec’s stock has declined 19% this year, more than any of the other lenders on the six-member FTSE/JSE Africa banks index, which is down 5.6%.

Petrol price triples in a decade

By James de Villiers for Business Insider SA 

The price of a litre of petrol in South Africa increased from R6.92 in July 2008 to R15.53 in July 2018 at the coast, and from R7.16 to R16.02 inland – nearly tripling in the last decade.


Infographic: Fin24

Over the same period, the tax (or fuel levy) on a litre of petrol increased from a low of R1.27 in July 2008 to R3.37 in July 2018.

This means the tax on fuel increased by 165.35% in 10 years.

On Sunday, the department of energy announced that a litre of unleaded petrol will increase by 26c, pushing the price of a litre past R16 in the inland for the first time.

Energy Minister Jeff Radebe ascribed the increasing petrol price to the rand’s poor performance to the US dollar.

Radebe said the increase would have been 20c more if it wasn’t for declining oil prices.

Source: The Citizen 

R1 666 to rent an office chair for a month may seem a bit steep, but that’s exactly what the bankrupt state insurer is charging.

Are you sitting down for this?

The Road Accident Fund has pushed through a contract for the rental of 300 office chairs for almost half a million rand a month, in what amounts to R1 666 per chair, the Sunday Times has reported.

Another furniture contract with the same company, Gxakwes Projects, for R60-million, did not go ahead. Both contracts did not have a tendering process.

The fund is technically insolvent, with contingent liabilities totalling almost R190 billion, hence its attempts to make money by renting out office furniture.

The RAF takes R1.93 of every litre of South African petrol sold.

This has not helped them avoid a R34.7-million loss last year.

While the fund admits that renting furniture was “not the best option”, they say they need to do so “to settle claims immediately, resulting in a creditors book of about R8 billion.”

Transport Minister Blade Nzimande dissolved the fund’s board this week, declaring it dysfunctional and affected by “serious divisions”.

Gxakwes Projects, the company involved in the furniture contracts, has been red flagged by the National Treasury after a similar deal was entered into with Eskom, who wanted R24 million for the purchase of 9 217 chairs.

An inspection by the Treasury found that only 500 chairs were needed.

The attempt to secure a five year, R60-million contract without a tender was thwarted by some board members concerned that the “process is fraught with legal concerns.”

Reports of the goings on at the struggling state insurer are a bit like a car crash. As horrific as it is, you can’t look away.

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