Agrizzi’s testimony loses SA’s biggest BEE agency its accreditation

The explosive testimony of former Bosasa COO Angelo Agrizzi at the state capture inquiry has not only implicated politicians in widespread and orchestrated corruption, it has cost SA’s prominent Black Economic Empowerment (BEE) verification agency its accreditation status.

Empowerdex, which assists companies in complying with BEE rules and regulations, has had its accreditation suspended by the South African National Accreditation System (Sanas) – the only national institution responsible for carrying out accreditation of verification agencies. Sanas falls under the Department of Trade and Industry.

Sanas’s suspension of Empowerdex for three months is a blow for the firm and, by extension the BEE industry, given the dearth of credible rating agencies in SA that are able to verify the empowerment credentials of companies. Empowerdex gets the bulk of BEE rating, verification and advisory work in SA, providing such services to more than 6 000 companies.

A Sanas spokesperson confirmed to Moneyweb on Thursday that Empowerdex is under suspension – effective from April 4, 2019 – due to its “failure to comply with some of the accreditation requirements”. It did not disclose the reason for the firm’s suspension, citing confidentiality clauses in the processes through which it accredits firms.

Ratings for bribes

However, Empowerdex co-founder Vuyo Jack said the suspension of the company by Sanas is linked to the March 2019 testimony of Agrizzi, who alleged that a former Empowerdex employee received bribes from Bosasa in exchange for dishing out favourible BEE ratings on the company and its subsidiaries. Along with the bribing of prominent politicians and state officials, a favourable BEE rating would help Bosasa win state tenders since government prefers to do business with companies that have strong BEE credentials.

Agrizzi alleged that Andries Sebelebele, an apparent former employee of Empowerdex, received bribes amounting to R40 000 per Bosasa-linked company (Bosasa itself and its subsidiaries) for purposes of “sorting out the BEE ratings”.

Empowerdex is disturbed by Agrizzi’s testimony, which “led to the suspension of our accreditation by Sanas,” Jack told Moneyweb.

He said Agrizzi’s testimony goes against Empowerdex’s “values and principles” – prompting the firm to appoint “an independent third party to thoroughly investigate the matter” – a step Empowerdex has undertaken in hope of having its suspension lifted by Sanas.

“Should the outcome of the investigation support Agrizzi’s testimony, appropriate action will be taken against the individuals concerned including but not limited to laying criminal charges against [those] individuals,” Jack added.

Work halted

The suspension of Empowerdex by Sanas means it cannot take on new verification clients (companies) or complete any verification assignments it received prior to the suspension.

“We are working with other reputable accreditation agencies that have agreed to accept the transfer of our current verification assignments,” said Jack. “Verification certificates issued prior to suspension [before April 4] remain valid.”

Empowerdex was founded in 2001 and is considered a pioneer by market watchers given that it started to specialise in the industry early on after South Africa had crafted its BEE policy and regulations. It has assisted companies to attain their empowerment certificates and comply with BEE and regulatory changes. Among these companies is JSE-listed and global industrials group Bidvest.

Jack is a respected businessman who served on the board of the Public Investment Corporation (PIC) from 2012 to 2015. He recently testified at the PIC inquiry that there was a culture of fear and poor decision-making, which led to governance issues at the firm that manages more than R2 trillion in assets on behalf of the Government Employees Pension Fund and other funds.

BEE compliance specialist Paul Janisch described the suspension of Empowerdex as a blow for the industry, as there are not many large firms that have the capacity to take on the large volume of clients and work that the firm enjoys.

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