Sunday, August 15, 2010

Shield caught with fake BEE scorecard

August 16, 2010

By Mzwandile Jacks

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Shield Chemicals risks losing critical shelf space for its car care products if Massmart, the JSE-listed retailer, establishes that the 46-year-old car-care company submitted broad-based black economic empowerment (BEE) scorecards that could not be authenticated.

This could also open up the floodgates of enquiries from major South African retailers for its broad-based BEE scorecards as Shield does business with major retailers throughout the country.

BEE scorecards were introduced to assess companies' BEE status under the government's official codes of good practice on broad-based BEE. They are used to measure a company's contribution to economic transformation.

A company can score points in seven elements of broad-based BEE. These elements include human resource development, economic development and procurement from empowered companies.

There are a total of 100 points available. To qualify for 15 points, a business can involve itself in developing the skills of its employees (human resource development).

Massmart's group corporate affairs executive, Brian Leroni, confirmed on Friday that during the process of gathering broad-based BEE scorecards from suppliers this year, it identified an irregular scorecard that had been submitted by Shield.

Each year, companies have to check whether the companies they are doing business with have authentic BEE credentials.

"We raised our concerns with Shield who immediately undertook to investigate the veracity of the scorecard," Leroni said. They subsequently confirmed that the scorecard was in fact invalid and undertook to conduct a forensic investigation to determine how it came to be issued to Massmart."

Business Report has copies of documents claiming to be broad-based BEE certificates allegedly submitted by Shield. One states that the company was rated in November 30 2010, which is impossible as this date is in the future. The 2009 certificate number - EMEX0223 - is the same as the 2010 one. The number must be different for each year.

Massmart has scheduled a meeting with Shield for next week at which time it is anticipated that Shield will share the results of the forensic investigation.

"We will then decide on the way forward," Leroni said.

However, the legal and compliance manager at Emex Trust, a BEE verification agency, Corné Bester, was convinced that Shield had manufactured Emex Trust documents "purporting to be broad-based BEE certificates".

The copies in Business Report's possession have big letters stating "INVALID: CREATED FRAUDULENTLY BY SHIELD REPRESENTATIVE".

Launched in 2005 by four trustees to satisfy the needs of clients seeking a broad-based BEE certificate, Emex has already implemented a sophisticated BEE verification management system linked to a compliant supplier database of 177 206 enterprises.

The SA National Accreditation System (Sanas) is recognised by the government as the single national accreditation body. Emex, as a verification agency, prints these scorecards. Bester said that this incident was not a common occurrence.

"We have terminated our relationship with Shield and would not deal with them in the future as we view the matter in a serious light," Bester said.

"We are going to report the case to the Department of Trade and Industry and Sanas. And a possibility exists that further legal action against Shield may follow," Bester said.

Criminal charges could be laid against Shield. There was also a possibility Emex could claim for civil damages. "We are still weighing our options," Bester said.

The financial director at Shield, Jason Clark, said that he had mistakenly used the Emex letterhead when he was trying to do a "self assessment".

Before verification agencies came into being, companies were allowed to assess themselves and submit BEE scorecards, Clark said. He claimed he was not aware he was using the Emex letterhead from Shield's 2007 broad-based BEE scorecard.

"This was my own mistake. But there was nothing malicious and there was no monetary gain on my side from this," Clark claimed.

According to Shield's website you can buy its products from retailers including Shoprite, Checkers, Dion, Pick n Pay, Midas, Mica, Spar, Builders Warehouse and Build It. Clark would not reveal how much money Shield expected to lose if its contract with Massmart was terminated.

Keith Levenstein, the chief executive of EconoBEE, said Shield had given itself an average score in the certificate. The certificate states that the company has a level 55 percent to 56.9 percent score, making it a contributor with a low fronting risk. EconoBEE is a Johannesburg-based company that assists companies with BEE and scorecard compliance.

Business Report

Comments by Sonny

BEE is fake empowerment anyway!!

Competence should be the criteria, not colour!!

Welcome to Africa!

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