South Africa's Broad-Based Black Economic Empowerment Commission confirmed on 25 November 2020 that it had found African Tuna Traders CC, owned and operated by Chris Hamel and Jonathan van Breda, to have used Umbhalo Trading (Pty) Ltd and Homotsego Trading (Pty) Ltd as black-operated fronts in contravention of the Broad-Based Black Economic Empowerment Act ("B-BBEE Act").
The Commission's investigations revealed that black employees were presented as black shareholders for the purposes of obtaining the fishing rights that African Tuna Traders CC currently trades with in the fishing industry, with no participation or economic interest for these black employees.
The consequences could be severe for African Tuna Traders CC, Umbhalo Trading (Pty) Ltd and Homotsego Trading (Pty) as their fishing rights could now be cancelled in terms of section 13A of the B-BBEE Act, read with section 28 of the Marine Living Resources Act.
According to the investigation, African Tuna Trading owns 20% of Umbhalo Trading (Pty) Ltd. The balance of 80% is owned by Homotsego Trading (Pty) Ltd in which Mr Phephe Elias Khekhe and six other black people held 14.29% each as direct shareholders. In practice, the Commission found, all three entities were operated by Jonathan Ronald van Breda and Christopher Fergus Hamel, "without the participation of and/or economic interest to black people who were presented as shareholders."
African Tuna Traders CC has 0% black ownership while Homotsego Trading (Pty) Ltd is dormant and does not have any financial statements. Both Umbhalo Trading (Pty) Ltd and Homotsego Trading (Pty) Ltd were created as empowerment companies but had no employees and the administrative functions for Umbhalo Trading (Pty) Ltd were performed by African Tuna Traders CC. African Tuna Traders CC stated that the only revenue of Umbhalo Trading (Pty) Ltd was from the license fees charged to other related companies on the basis of the fishing rights it holds.
The Commission's findings also expose African Tuna Traders CC, Umbhalo Trading (Pty) Ltd and Homotsego Trading (Pty) Ltd to criminal charges related to fronting and misrepresentation.
The Commission's findings bring to the fore two important issues that concern the South African fishing industry, particularly given that a high value long term fishing rights allocation process is on our horizon.
The first is that fronting and the use of vulnerable black folk as "shareholders" and "directors" by existing right holders is certainly pervasive. We know that working in the industry. What is also pervasive is that the granting of hundreds of economically unviable and tiny fishing rights to many predominantly black companies has created a class of paper quotas and rent-seekers.
The second is that the department's near singular focus on allocating fishing rights to black owned and managed companies to the near exclusion of assessing anything else creates the vulgar incentive to use desperate black people who are increasingly and largely the mass of unemployed South Africans as fronts to secure fishing rights.
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