Protech Khuthele in BBBEE poser

Construction group Protech Khuthele released a curious statement last week saying it has achieved a level four Broad-Based Black Economic Empowerment (B-BBEE) rating.

This was after Protech Khuthele completed its 2013 B-BBEE verification, undertaken by Premier Verification. The group said the “The rerating marks a return to a level four from a level six rating at the end of 2012 due to the Protech Khuthele BEE Trust no longer being recognised as a BEE vehicle”.

“We are proud of this rerating, which comes as a result of a clearly focused B-BBEE strategy. Going forward we will focus on increasing our achievements in preferential procurement and skills development through a phased implementation, as well as the rectification of the Protech Khuthele BEE Trust deed to ensure compliance” commented Antony Page, CEO.

The statement is curious in coming after an apparent conflict between the B-BBEE trust and Protech Khuthele.  The JSE listed construction company, Protech Khuthele, has been trying to repel a takeover bid by Eqstra. The bid was said to enjoy the support of the B-BBEE Trust which owns about 20% of Protech Khuthele.

At the beginning of April Protech Khuthele was questioning the authenticity of the undertaking made by the BBBEE Trust around the Eqstra bid. In a letter to shareholders, Protech’s chairperson Terence Rensen said “Protech has attempted to gather information about the circumstances surrounding the irrevocable undertaking to accept the Eqstra offer, which was given on behalf of the Protech Khuthele BEE Trust by Protech Khuthele Black Economic Empowerment Proprietary Limited (SPV)…”

Rensen added that the Trust was established to allow employees and other parties engaged in Protech’s business to benefit from Protech’s activities and growth. “Importantly, the Trust was established for purposes of black economic empowerment”. He said Protech is of the view that a sale of the Protech shares held by the Trust would not fulfill these objectives.

“Protech is also concerned that proper governance processes were not followed in granting the irrevocable undertaking, and has not received information it has requested from various parties to answer the legitimate questions it has raised.

On legal advice Protech is of view that the trustees of the Trust did not have the power or authority to approve the disposal by the SPV of the shares in Protech. “Also, the SPV did not have the authority to give the irrevocable undertaking to Eqstra”.

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