Dissention in the senior ranks of an electronics industry body has seen the opposing sides accuse each other of acting illegally, and both claim to have taken legal action against one another.
This comes at a time when three electronics manufacturing companies - whose interests National Association of Manufacturers in Electronic Components (Namec) is meant to protect - face the loss of some 300 jobs, around a 10th of the total number employees in the sector, because Samsung has cancelled their deals to make televisions. Instead, the Korean manufacturer will make the boxes itself in Durban's Dube TradePort, and will benefit from a tax rate half that its former suppliers had to pay.
At the heart of Namec's dispute is a R51 million set-top box deal inked by its representatives, reportedly with local pay-TV provider MultiChoice and Chinese set-top box manufacturer Skyworth Digital, for the potential supply of 15 million boxes, over the next three years. The factory that is set to be established as part of the deal was intended to be the start of a national plan to aid Namec's members to provide government with subsidised boxes for digital migration.
At loggerheads
However, the contract has pitted Namec deputy secretary general Professor Kunene and MD Bongani Sibeko against the organisation's erstwhile chairperson, Keith Thabo, and CEO, Vijay Panday. Speaking during an interview yesterday, Kunene and Sibeko revealed they have established a National Transformation Task Team to deal with the "challenges" resulting from Thabo and Panday's actions, and say they are currently taking legal action.
Namec secretary general Adil Nchabeleng recently accused Thabo and Panday, via an open letter to Namec members, of hijacking the multimillion-rand deal, alleging the pair had transferred the manufacturing deal to China, and that both positioned themselves as 50-50 equity owners and beneficiaries in the transaction. Since then, the dispute has seemingly divided Namec into two, with each side claiming to be the rightful leadership of the organisation.
However, Sibeko and Kunene insist the organisation is intact and that they are pursuing legal action against Thabo and Panday. "To say things fell apart is not inaccurate," says Sibeko, adding that Namec has set up the transformation task team to deal with the dissention. "We're following the full extent of what the law permits."
But Thabo has dismissed the allegations, saying this morning that he has laid unspecified criminal charges against Kunene. He denies any wrongdoing from his side and says the deal remains on track.
Shedding jobs
Meanwhile, the industry players set to lose out because of Samsung's $20 million Durban investment say the factory essentially sets the lobby group up as competition against them, at a time that Namec should be lobbying government for an industry-wide tax incentive.
Vektronix MD Craig Tyzack says the company, which currently employs 290 people, expects to lose as many as 100 staff early next year when the adverse effects of the loss of the Samsung contract kicks in. Between Vektronix, Anyview and Altech UEC - all of which have lost out - the industry will shed a net 300 jobs, he says.
Samsung's location in the Dube TradePort means it is only paying 15% tax, compared to the usual company rate of 28%, says Tyzack. The Department of Trade and Industry was approached over the company's concerns, but stated it should also move to the port, which would mean moving a 12 000m2 factory, a situation that is not viable, while moving to another special economic zone would lead to a loss of skills, he notes. The department and Samsung were approached for comment, but did not respond.
Tyzack adds the company could look at dropping its prices if there was a 15% incentive, but notes he is not sure what Namec is doing for the industry.
Anyview Technologies, which is set to shut its doors - at the cost of 200 jobs - at the end of November, has not been able to replace the "void", says CEO Jaime Vilela. He notes all government has done is move work into a lower tax zone at the expense of local manufacturers. "I don't see any future for our local companies."
Vilela notes Namec is meant to be an umbrella body that lobbies for the industry, but wants to become a manufacturer that competes against the sector. "If they lobby, they can't be opposition." The sector employs around 2 000 to 3 000 people, and is worth about R20 billion annually, he says.
However, Sibeko denies Namec will be in competition with the rest of the sector, arguing the factory, at the heart of the mess, will be run as a collective of its members and was meant to be the start of a nationwide endeavour that would create jobs and boost empowerment companies. Namec's collective of manufacturers was hopeful of winning the tender to build subsidised boxes. "It was really a high-tech manufacturing facility."
Although conceding job losses will have a ripple effect throughout local economies, and that the sector needs a strong lobby body that will secure incentives, Sibeko, however, is on the same page as government when it comes to bringing in foreign direct investment.
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