BEE is a crime, a form of extortion, and expropriation without compensation – Papenfus

NEASA CEO Gerhard Papenfus says BEE is an inherently fraudulent form of enterprise and that companies are blackmailed into giving shares away.

Papenfus shared his views in an open letter to the Minister of Mineral and Petroleum Resources, Gwede Mantashe.

This letter was in response to Mantashe’s claim that anyone who opens a debate about black economic empowerment (BEE) promotes white supremacy.

The minister argued that BEE has opened up the space for innovative black South Africans to be owners in the mining sector.

“Coal mining is 80% owned and managed by black South Africans. More than 50% of manganese mining is owned and managed by black people,” he said.

He added that although platinum group metal mining is majority-owned by others, black South Africans manage this sector.

“Everybody who opens a debate about BEE today is promoting white supremacy,” Mantashe said in the interview.

He added that white dominated parties, like the Freedom Front Plus and the Democratic Alliance, hate black economic empowerment.

“They hate BEE because it is changing what they were built on. They are dependent on white capacity,” he said.

He said that black economic empowerment enabled black people to become owners, executives, and managers at South African companies.

“Those who promote white supremacy and regard blacks as inherently inferior hate black economic empowerment,” he said.

Mantashe’s attack on BEE opponents came as many political parties and companies have highlighted the policy’s failure.

Last year, the Democratic Alliance (DA) proposed a new Bill that could replace BEE with a system aimed at bolstering economic growth and employment.

The party argued that BEE has not fulfilled its mandate and has failed to uplift poor black South Africans.

“The ANC’s economic policies have left South Africans unemployed and poor. This is not the inclusive country that we envisioned building in 1994,” the DA said.

NEASA CEO Gerhard Papenfus hits back

Papenfus responded to Mantashe’s accusations in an open letter, which slated black economic empowerment and how it is implemented.

“We do not hate the economic empowerment of any race, but we certainly detest the race-based BEE scheme,” he said.

“This is not only because whites are severely prejudiced by it, but also, as a result of its inherent defects, all races are negatively affected.”

He added that only a small group of politically connected individuals are made spectacularly wealthy through BEE, while everyone else is losing out.

Papenfus argues that even the select few who benefit now through this scheme will eventually be the biggest losers.

“No one escapes the eventual outcome of engaging in dishonest activity, and BEE is an inherently fraudulent form of enterprise,” he said.

He said BEE beneficiaries are gifted shares of businesses, not through hard work, but as a result of political coercion.

“It forced companies to give in to blackmail for the privilege to be allowed to participate in the mainstream economy,” he said.

“The BEE model breaks every rule for sustainable wealth creation. You will not find anything remotely resembling this model in any business handbook.”

Papenfus added that the hundreds of billions, if not trillions, pumped into BEE were mainly fruitless and wasteful expenditures.

“The highest cost to the economy is the fact that BEE beneficiaries have set the tone in establishing a culture of not working oneself out of poverty,” he said.

“They have set an example that belittles the lasting successful combination of hard work, patience, and a moderate lifestyle.”

“This has created a population that aspires to get rich quickly by piggybacking on others’ success, without any willingness to make sacrifices.”

He added that for many, the urge for quick riches has become so overwhelming that they have resorted to crime.

“But then again, BEE in itself is a crime, a form of extortion, a form of expropriation without compensation that amounts to theft,” he said.