You're damned if you do and you're damned if you don't. That is the unfortunate situation that Lightedge Technologies has found itself in. By some accounts, the company BEE'd itself out of existence, finding that even a 40% empowerment shareholding was not enough to save its bacon.
Others claim the business was badly run and its demise is not surprising. Regardless, there are three sides to every story.
This week, the High Court placed the technology distributor under liquidation, following an application by one of its suppliers for non-payment. According to Lightedge director David Musikanth, it was the company's inability to score sufficiently on broad-based black economic empowerment criteria that lead to the mess.
Basically, Musikanth says the company's Level 7 BEE status was not enough to satisfy many of its clients, leading to a loss of business. Ideally, the company should have been a Level 4 - and giving away 40% equity to Red Magic (yes, the latter did not pay a cent) was not good enough.
This has already sparked the "To BEE or not to BEE" debate, which I'm not going to go into. However, what is absolutely shameful is that a 15-year-old company and its 250 staff members now face an uncertain future.
Whether you support the ongoing practise of BEE (a decade and a half into democracy), or not, there is a lesson to be learnt here.
If wielded unchecked, BEE can be a dangerous weapon. The fight for compliance with empowerment criteria, and its associated scorecards, has become a bloody slaughterhouse. Companies, big and small, not only try to walk the line, but are willing to perform any fancy tricks to satisfy their masters.
Thus, it is dangerous when companies like Telkom, whose contracts have the potential to make or break SME suppliers, decide to put forward their own BEE requirements - over and above those stipulated by government.
As Musikanth says, despite having established a good reputation in the market and having achieved all the required IT credentials Lightedge needed, major customers started to drop their spending with the company as it did not bolster their BBBEE ratings.
I don't think it's necessary to spell out the dire consequences for the economy if such a gung-ho approach to BEE is allowed to continue.
A little less conversation...
The fight for compliance with empowerment criteria, and its associated scorecards, has become a bloody slaughterhouse.
Martin Czernowalow, news editor, ITWeb
SA's telephone ministers 1 and 2 are beginning to repeat themselves - more so than usual. Communications minister Ivy Matsepe-Casaburri and public enterprises hero Alec Erwin this week entertained the country at yet another insightful parliamentary media briefing.
This time, we learned that government is forging ahead with plans to lay a West Coast undersea cable, in partnership with the private sector, which will complement the East Coast cable projects. Hang on, I do recall hearing this before.
Nonetheless, I suppose since Ivy and Alec are on their way out, they don't really see the sense of starting anything new. Regurgitation of old promises and half-truths will do for now. Think telecoms costs, broadband, liberalisation, etc. The list goes on. Yawn.
It's rather disturbing that this particular briefing was meant to outline government infrastructure plans, following Thabo Mbeki's rambling State of the Nation address.
Oh yes, let's not forget that set-top boxes and Sentech's rural projects got the usual mention. Thanks, I feel enlightened now. At least I can rest assured that nothing has changed.
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