AVI black economic empowerment dispute heads to the B-BBEE Commission

The dispute has landed at the B-BBEE Commission.

The dispute has landed at the B-BBEE Commission.

Published Apr 10, 2024


A dispute between AVI Limited and its former empowerment partner Main Street 198, led by entrepreneur and former anti-apartheid activist Khusta Jack and comprising beneficiaries that includes orphans and widows, has landed at the B-BBEE Commission.

The dispute revolves around an empowerment shareholding in one of the country’s leading fishing companies, Irvin & Johnson (I&J), a subsidiary of AVI.

At issue is the manner in which AVI disposed of a R1.2 billion equity partnership between I&J and Main Street.

Jack, who is chairperson of Main Street, claimed to the Commission that AVI had undermined the broad spirit of goodwill that underpins the government’s BEE policy.

“We have escalated our case to the Commission because we believe there are many cases of companies who think BEE is merely a box-ticking exercise to qualify for major government business, without a genuine commitment to transformation of the economy,” Jack said.

“In our instance we feel we were used to secure for I&J long-term fishing rights, and once those rights were in the bag AVI dumped us for another BEE partner, almost like a revolving door policy.”

AVI directors could not be reached for comment yesterday, but the group explained the change in empowerment partner in its 2023 annual report.

AVI said that after being extended in 2012, 2018 and 2022, the B-BBEE transaction with Main Street came to maturity on July 1, 2023, and “was terminated in accordance with the agreements”.

“AVI and I&J are proud to have successfully partnered with Main Street over a 19-year relationship which generated significant value for all parties, including over R202 million in net cash flows for Main Street,” AVI’s directors said.

“In line with the group’s commitment to transformation … a new broad-based black economic empowerment transaction was implemented on July 1, 2023.”

They said Twincitiesworld (Pty) Ltd, a 100% black-owned company, acquired 18.75% of the issued share capital in I&J.

“The structure of the new transaction aligns with that previously in place and provides Twincitiesworld with the opportunity to participate in the economic benefits of I&J Limited through a material ownership stake,” AVI said.

Jack, however, said the termination of their BEE shareholding was “a perversion of the spirit of BEE and all the policy was intended to achieve”.

In a letter to the Commission’s Madidimalo Ramare, Jack warned that AVI’s conduct may possibly be in breach of certain statutes.

“Please be advised that if the B-BBEE Commission is of the view that there may be the commission of an offence, be it fronting practice or misrepresentation of B-BBEE stature, the B-BBEE Commission will refer the matter to SAPS and/or the NPA for criminal processes to be considered as required in terms of section 13J(5) of the Act,” he wrote.

Jack further claimed that if it was not for their participation as an empowerment partner, I&J would never have been awarded commercial fishing rights.

“Once the rights were secured AVI then turned around and said to us you can go now we have found new BEE partners, which is an entity that had no role in the group when the fishing rights were applied for and awarded. As a result we will derive no benefit whatsoever from the long-term rights that our involvement was instrumental in securing,” he said.