Altron has won a major court victory against Telkom and its subsidiary BCX in a tiff about the telecommunications company’s controversial black economic empowerment (BEE) status.
Rob Davies, minister of trade and industry in 2019, declared Telkom as a BEE Facilitator.
The BEE legislation makes provision for organs of state to be declared BEE Facilitators, and the effect is that such an organ of state will then be regarded as 100% black-owned, even if it is not.
Altron and other businesses objected to this on the basis that Telkom, and more specifically, BCX, will obtain an uncompetitive edge over private businesses that compete with it if the application succeeds.
In spite of the objections, Davies approved the application and granted Telkom BEE Facilitator status at the beginning of May 2019.
Strangely, although Telkom brought the application, the final decision of the minister reads that the BEE Facilitator status is granted to government, represented by the Office of the Presidency, in respect of government’s 40.5% shareholding in Telkom.
Altron was of the view that the minister’s decision was flawed, both from a procedural and substantive perspective, and it decided to take the minister’s decision on review to the High Court.
MTN joined Altron in the application, with the minister, Telkom and BCX opposing the application.
Chris Potgieter, Altron group executive for legal, following the ruling: “Altron took a decision to take this matter on review because we believe that the minister’s decision to grant the BEE Facilitator status was procedurally and substantively wrong and was contrary to the spirit of the BEE Codes.
“The result of the BEE Facilitator status approval was that Telkom and its BCX subsidiary obtained an unfair advantage over their business competitors through the resultant increase in Telkom’s and especially BCX’s BEE levels, without them having to take the corporate actions and having to incur the costs which other companies have to do in order to improve their BEE status.”
According to Potgieter, MTN joined Altron in the review application and Vodacom was mentioned as it, as a telco, had a vested interest in the matter.
“Altron welcomes the judgment as it shows that government is bound to follow fair and correct procedures and it takes away the unfair competitive advantage that Telkom and BCX obtained,” he says.
Meanwhile, Telkom tells ITWeb: “In compliance with the decision by the Gauteng High Court to set aside the minister of trade and industry’s decision to grant facilitator status to the government in respect of the government shares in Telkom SA, Telkom and certain of its subsidiaries have included the impact of the judgment in their revised B-BBEE certificates.”
Where required, it says, other subsidiaries have applied for re-verification of existing certificates.
“Telkom is pleased that the court’s decision will not be implemented retrospectively. In setting aside the minister’s decision, the court said the ruling will not affect the B-BBEE status of Telkom and its subsidiaries for the purposes of any tender or contract awarded and/or concluded after 7 May 2019 and before the judgment date (8 July 2020).”
According to Telkom, tenders and contracts concluded during this period will retain the facilitator status until the end of the terms of these contracts.