|B-BBEE Commission (initiation)||Vicky Adey Consulting CC & Others|
|Summary / nature of the complain|
|Matter initiated by the B-BBEE Commission – Respondents are Vicky Adey Consulting CC and its two members – Allegations – misleading and distorting information about B-BBEE, misrepresentation of B-BBEE status and fronting practice, which followed after a video recording was circulated across social media in South Africa showing Olufunsho Adebayo Ademoye, a Nigerian born African male, claiming that he is benefiting under the B-BBEE laws of South Africa through his South African business, which statements pointed to possible misrepresentation and fronting practices that warranted an investigation - Findings - evidence of misrepresentation of B-BBEE status found, no evidence of fronting practice could be established, Respondents secured placement of panels of organs of state as well as CIDB grading based on the misrepresented B-BBEE status - Recommendations – Respondents agreed to remedy the adverse findings, including by withdrawing from the government panels in question, voluntarily surrendering the CIDB grading and making contribution in good faith towards NSFAS.|
|Brief description of the Complaint|
| The B-BBEE Commission received information through media channels, in particular Twitter and WhatsApp, that contained statements that distort and mislead on the application of B-BBEE in South Africa. The statements were made by Olufunsho Adebayo Ademoye, a member of Vicky Adey Consulting CC. The information received further indicated possible fronting and misrepresentation of B-BBEE status by Vicky Adey Consulting CC. |
The following are the two of the captions that appeared on the social media twitter on 14 and 15 May 2020 and circulated across other social media platforms:
Picture 1: Screenshot from twitter of 14 May 2020
Picture 2: Screenshot from twitter of 15 May 2020
Based on the information, Vicky Adey Consulting CC is claiming to be 100% black owned, and such black ownership includes a Nigerian national who does not qualify as a beneficiary for B-BBEE purposes. Vicky Adey Consulting CC has two members, Olufunsho Adebayo Ademoye and Phumudzo Nancy Muthelo, who respectively hold 40% and 60% members’ interest.
Further, based on the information, it appears that Vicky Adey Consulting CC may be accessing opportunities in government on the basis of the B-BBEE status that includes ownership of a Nigerian national (40%) who does not qualify to benefit under the B-BBEE Act if one has regard to the definition of black people in section 1 of the B-BBEE Act.
From the preliminary assessment of the information received, including the details of the close corporation on the Central Supplier Database and the Companies and Intellectual Property Commission, there was an indication that Vicky Adey Consulting CC may be misrepresenting its B-BBEE status to obtain government contracts and other authorisations from government.
In essence, Olufunsho Adebayo Ademoye, a member of Vicky Adey Consulting CC appeared in a Morning Television Show in Nigeria talking about B-BBEE, basically indicating that he is a beneficiary of B-BBEE, that he is a business man in South Africa that has tenders from government and also that being a permanent resident in South Africa and married to South African woman entitled him to benefit under B-BBEE.
The video was circulated widely on social media and immediately raised a concern as the content was misleading and incorrect. It therefore seemed that if Olufunsho Adebayo Ademoye claims to get contracts through his corporation in South Africa, the B-BBEE status of his corporation would be incorrect as he is a Nigerian born African male who does not qualify for a benefit under the B-BBEE Act:
|Summary findings of the Complaint|
| Vicky Adey Consulting CC, a close corporation duly registered in accordance with the laws of South Africa under registration number 2007/196304/23, together with its members Mr Olufunsho Adebayo Ademoye and Ms Phumudzo Nancy Muthelo have violated the B-BBEE Act and acted contrary to the objectives of the B-BBEE Act on the basis of the following: |
Vicky Adey Consulting CC is a close corporation that is owned by Olufunsho Adebayo Ademoye and Phumudzo Nancy Muthelo with 40% and 60% each, respectively and this is confirmed by the Companies and Intellectual Property Commission and the Central Supplier Database, and admitted as correct by the respondents.
Vicky Adey Consulting CC claimed to be a 100% black owned and 60% black women owned Exempted Micro Enterprise with a B-BBEE Contributor Level 1, however, evidence shows that Olufunsho Adebayo Ademoye, who holds 40% members’ interest in Vicky Adey Consulting CC does not qualify under the definition of black people in the B-BBEE Act;
Section 1 of the B-BBEE Act has defined black people as Africans, Coloureds and Indians who are citizens of the Republic of South Africa by birth or descent; or who became citizens of the Republic of South Africa by naturalization before 27 April 1994 or on or after 27 April 1994 and who would have been entitled to acquire citizenship by naturalization prior to that date, and Olufunsho Adebayo Ademoye does not meet this definition;
Olufunsho Adebayo Ademoye is a Nigerian born male who acquired citizenship in South Africa by naturalisation after 27 April 1994 and as a result his 40% members’ interest in Vicky Adey Consulting CC cannot be included as black ownership for purposes of compliance with the B-BBEE Act;
Olufunsho Adebayo Ademoye is a South African citizen born in Nigeria, but based on the documents seemingly issued by Department of Home Affairs, he was naturalised on 19 August 2009, which means he cannot be regarded as a black person as defined in terms of section 1 of the B-BBEE Act.
Vicky Adey Consulting CC can thus not be presented as a 100% black owned corporation as such claim is untrue, false and incorrect as Olufunsho Adebayo Ademoye fails to meet the definition in section 1 of the B-BBEE Act.
According to Olufunsho Adebayo Ademoye and Phumudzo Nancy Muthelo, they got married customarily in 2015 and the marriage was registered with the Department of Home Affairs. Whereas Olufunsho Adebayo Ademoye and Phumudzo Nancy Muthelo got married customarily in 2015, the copy of the Permanent Residence Permit of Olufunsho Adebayo Ademoye issued on 10 October 2006 categorises him as a spouse already in 2006, but it is not indicated to whom he was a spouse as it is clearly not Phumudzo Nancy Muthelo.
Phumudzo Nancy Muthelo is a South African citizen by birth based on the copy of the Identity document submitted to the B-BBEE Commission, and her 60% in the corporation can be regarded as black as she would meet the definition of black people in the B-BBEE Act.
Other than her signature in the B-BBEE sworn affidavit dated 07 October 2018, 2017 financial statements and on the acceptance letter for Coega Development Corporation, correspondence of Vicky Adey Consulting CC reflect credentials and signature of Olufunsho Adebayo Ademoye and not Phumudzo Nancy Muthelo as the majority owner.
On 07 October 2018 Phumudzo Nancy Muthelo deposed an EME B-BBEE sworn affidavit claiming that Vicky Adey Consulting CC is 100% black owned, 60% black woman owned, and that it is a B-BBEE Level 1, using the generic Codes of Good Practice. This B-BBEE sworn affidavit and previous others were admittedly submitted to organs of state and public entities by Vicky Adey Consulting CC to secure contracts/work or other authorisations.
In this regard Vicky Adey Consulting CC presented itself for opportunities to Department of Education, Gauteng Province, Independent Development Trust and Coega Development Corporation, who subsequently selected Vicky Adey Consulting CC for their panel of service providers/contractors. Further, Vicky Adey Consulting CC also made an application to the Construction Industry Development Board and was subsequently awarded a CIDB Grading Level 4.
As the black ownership status of Vicky Adey Consulting CC as a 100% black owned corporation is incorrect and false, Vicky Adey Consulting CC and its members misrepresented its B-BBEE status as the corporation is only 60% black owned, which would only entitle it to the automatic B-BBEE Level 2 provided that the exercisable voting rights, economic interest and net value requirements have been met as guided by the Construction Sector Code.
Based on the averment by members that they operated the corporation as a family business that did not keep any records of meetings or decisions of the corporation, also noting that the corporation has not demonstrated that it was operated in accordance with the basic corporate governance entailed in the Close Corporations Act and that no profit shares were distributed to the black member, Vicky Adey Consulting CC is not entitled to even claim the automatic B-BBEE Level 2.
In terms of Item 4.2.3 of CSC 000 of the Construction Sector Code, an entity that is at least 51% black owned but less than 100% black owned can claim the automatic B-BBEE Level 2. According to Schedule 1 of the Construction Sector Code defines 51% black owned to mean an entity in which black people hold at least 51% of the voting rights and at least 51% of the economic interest and has earned all points for net value under Statement CSC 100.
Vicky Adey Consulting therefore would have been entitled to claim the automatic B-BBEE Level 2 based on the 60% black ownership of Phumudzo Nancy Muthelo, however, there is no evidence of 60% exercisable voting rights and economic interest, which means it cannot be regarded as at least 51% black owned for purposes of claiming the automatic level.
Not only has Vicky Adey Consulting CC misrepresented its B-BBEE status in terms of the B-BBEE Act, but it has also submitted false or misrepresented information regarding its B-BBEE status to organs of state and public entities, including those mentioned above, for purposes of determining its B-BBEE status.
Olufunsho Adebayo Ademoye and Phumudzo Nancy Muthelo claim that they were not aware of the requirements of the B-BBEE Act and Phumudzo Nancy Muthelo stated that she thought that Olufunsho Adebayo Ademoye qualified to be regarded as a black person under the B-BBEE Act. Phumudzo Nancy Muthelo in her affidavit stated that “…I was under the impression that being a South African citizen, and a black male, he was indeed black as anticipated by the Act.” Olufunsho Adebayo Ademoye stated in his affidavit that “I claimed that Black Economic Empowerment initiative is meant to benefit Africans, Coloureds, Chinese, Indians and not only Black South Africans. I claimed that we as South African permanent residence are due beneficiaries of the BEE initiative.”
It is a fact that ignorance of the law is not an excuse and cannot absolve respondents from liability. It is more worrying in this case that reasons provided by the respondents for such alleged ignorance of the law are not consistent. In any event, records show that apart from misrepresenting the B-BBEE status of Vicky Adey Consulting CC for tenders/contracts, the respondents also misrepresented the information when they made their application to Construction Industry Development Board for the grading.
Specifically, in the application to Construction Industry Development Board the respondents included financial statements that reflect turnover that cannot be substantiated given that the affidavit of Olufunsho Adebayo Ademoye stated that the sub-contract they referred to for 2016/17 was not successfully completed for the corporation to derive the revenue reflected on the financial statements of 2017 submitted to Construction Industry Development Board.
The above said, in the application to Construction Industry Development Board the respondents included a letter from an entity, Kontinental Engineering Consulting, that purports to confirm that Vicky Adey Consulting CC delivered on the RDP Housing project, not maintenance, for a specified value, when the respondents stated under oath that the sub-contract in 2016/17 was not completed, which may either mean that this letter is fabricated or the respondents lied under oath. The respondents have shown what seems to be a trend or tendency to falsify or misrepresent information for a specific purpose, including for accessing tenders or other authorisations from government, as is the case with Construction Industry Development Board.
Vicky Adey Consulting CC reflected on its B-BBEE sworn affidavit that the nature of their business is Building and Civil Construction, which means that they operate within the Construction Sector Code. The amended Construction Sector Code came into effect on 1 December 2017, which means that Vicky Adey Consulting CC ought to have been measured using the sector code in question.
Vicky Adey Consulting CC has deposed to a B-BBEE Sworn Affidavit for Exempted Micro Enterprises through Phumudzo Nancy Muthelo claiming to be 100% black owned and 60% black women owned with a Contributor Level 1 based on the generic Codes of Good Practice whereas the entity falls within the construction sector.
Section 10 (3) of the B-BBEE Act states that an enterprise wherein the Minister of Trade, Industry and Competition has issued a sector code must apply that sector code. Vicky Adey Consulting CC applied the generic Codes of Good Practice and not the Construction Sector Code contrary to the B-BBEE Act.
Further, in the B-BBEE Sworn Affidavit deposed by Phumudzo Nancy Muthelo, the deponent did not indicate her designation as required and the calendar year was used as opposed to the financial year end in determining the total revenue of the entity. Even if Vicky Adey Consulting CC was entitled to depose a B-BBEE sworn affidavit, the B-BBEE Sworn Affidavit submitted is invalid for purpose of B-BBEE compliance as it falls short of meeting the requirements of the B-BBEE Act.
Olufunsho Adebayo Ademoye has been a member of Vicky Adey Consulting CC since 2007 and the South African born Phumudzo Nancy Muthelo only joined the entity acquiring 60% members’ interest in 2016, however, Olufunsho Adebayo Ademoye is responsible for the core operations and activities of Vicky Adey Consulting CC.
Vicky Adey Consulting CC indicated to the B-BBEE Commission that the role of Phumudzo Nancy Muthelo, who is the majority member in the entity, is attending tender briefings, client liaison, bookkeeping and office administration, while the core management and overall project implementation is performed by Olufunsho Adebayo Ademoye, as demonstrated by the various corporation documents executed and signed by Olufunsho Adebayo Ademoye.
Whereas Phumudzo Nancy Muthelo is said to be responsible for client liaison, the contact details for Vicky Adey Consulting CC that appear during the internet search of Vicky Adey Consulting CC are those of Olufunsho Adebayo Ademoye, an indication that Olufunsho Adebayo Ademoye is responsible for this function. As indicated above, Phumudzo Nancy Muthelo is reflected in a few areas, such as the B-BBEE sworn affidavit, financial statements for 2017 and the acceptance letter for Coega Development Corporation.
The arrangement between Olufunsho Adebayo Ademoye and Phumudzo Nancy Muthelo in relation to Vicky Adey Consulting CC indicates that Phumudzo Nancy Muthelo may be included in the entity owned by Olufunsho Adebayo Ademoye as a 60% member to enhance the B-BBEE status of Vicky Adey Consulting CC and give it advantage as a black women owned entity for opportunities.
The conduct and/or practice and/or arrangement of Vicky Adey Consulting CC, Olufunsho Adebayo Ademoye and Phumudzo Nancy Muthelo is contrary to the provisions of the B-BBEE Act.
| Vicky Adey Consulting CC, Olufunsho Adebayo Ademoye and Phumudzo Nancy Muthelo must within 10 days of the findings issue a written public apology which should be placed on public social media platforms, including Twitter and Facebook, the contents of which must be approved by the B-BBEE Commission and proof of publication to be submitted to the B-BBEE Commission within 24 hours of publication; |
Olufunsho Adebayo Ademoye must within 10 days of the findings record and place on social media, including Twitter and Facebook, a video specifically apologising to the South African public and the its government for the false, reckless, careless and misleading statements made on the Morning Television Show in Nigeria on 10 September 2019,the contents of which must be approved by the B-BBEE Commission and proof of publication to be submitted to the B-BBEE Commission within 24 hours of publication;
Vicky Adey Consulting CC, Olufunsho Adebayo Ademoye and Phumudzo Nancy Muthelo must within 10 days of the findings issue a letter immediately withdrawing from each panel of contractors / service providers of any organ of state or public entity, including the Independent Development Trust, Coega Development Corporation and Department of Education Gauteng Province, on the basis of false and misrepresented information, and proof to be submitted to the B-BBEE Commission within 24 hours of submission of the letters;
Vicky Adey Consulting CC, Olufunsho Adebayo Ademoye and Phumudzo Nancy Muthelo must within 10 days submit a letter to Construction Industry Development Board to surrender for cancellation the CIDB grading awarded to Vicky Adey Consulting CC on the basis of false and misrepresented information and proof to be submitted to the B-BBEE Commission within 24 hours of submission of the letters;
Olufunsho Adebayo Ademoye and Phumudzo Nancy Muthelo must within two (2) months attend training on B-BBEE and corporate governance with any service provider or training institution accredited to provide such training by relevant authorities in South Africa, noting that training by the B-BBEE Commission and Companies and Intellectual Property Commission as responsible regulatory entities for the B-BBEE Act and the Close Corporations Act respectively, and submit proof thereof to the B-BBEE Commission within 24 hours of attending such training; and
Vicky Adey Consulting CC must pay a once off monetary contribution amount of R50 000 (Fifty Thousand Rand) in the interest of the public towards the promotion of the objectives of the B-BBEE Act, in this case, skills development for black people at institutions of higher learning, noting the following:
the above contribution amount shall be paid to the National Student Financial Aid Scheme (NSFAS) in 5 monthly instalments of R10.000 (Ten Thousand Rand), particulars of which will be furnished by the B-BBEE Commission);
the contribution amount shall be paid within 10 (ten) days of receipt of the banking account details from the B-BBEE Commission by Vicky Adey Consulting CC, and proof thereof shall be sent to the B-BBEE Commission within 5 (five) days of such payments; and
this contribution amount shall not constitute a fine contemplated in the B-BBEE Act, shall not be regarded as a donation or form part of allowable corporate social responsibility or similar expenditure or be used for any legally allowable deductions in the determination of taxable income or any other similar deductions.
Whether or not the respondents accept the remedial recommendations, the B-BBEE Commission should issue a letter to Department of Home Affairs for them to verify the correctness and validity of Olufusho Adebayo Ademoye’s permanent residence, marital status and citizenship given the suspicion that false or misrepresented information may have been used to obtain the status. The B-BBEE Commission has since issued the letter to the Department of Home Affairs in this regard.
It is important to note that the respondents have accepted the remedial recommendations and have already implemented all with the exception of the recorded apology which is still to be uploaded as required. Respondents demonstrated full cooperation.
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