Investigation finds failures in South African BEE council
Investigations into the Broad-Based Black Economic Empowerment (B-BBEE) ICT sector council have found evidence of dysfunctionality within the group and financial reporting failures.
The results of the investigation were shared by the Minister of Communications and Digital Technologies, Solly Malatsi, in response to questions in parliament.
Malatsi said the investigation into the B-BBEE ICT sector council began at the start of 2025 and has found evidence of several key failures.
The B-BBEE ICT sector council is established by the Department of Communications and Digital Technologies and is responsible for ensuring that businesses in the ICT sector comply with current equality legislation.
It is also responsible for drafting and reviewing new legislation relevant to economic equality in South Africa’s ICT sector.
The council was investigated following several allegations, including governance failures, financial misconduct, and the deposit of funds into private accounts.
Malatsi said that the investigation confirmed the allegation that the council was dysfunctional and had not adequately fulfilled its mandate.
“The investigation confirmed that the Third B-BBEE ICT Sector Council was fundamentally dysfunctional and failed to fulfil its legislative mandate,” he said.
The investigation also found that these governance failures did not begin with the current council and that key issues had been inherited from the previous council.
Some of the investigation’s key findings were that the council had failed to meet its mandatory obligations and had failed to develop and recommend new legislation.
It was also noted that the council had failed to compile and submit annual monitoring reports to the Minister of Communications.
These governance failures may largely have been due to the council’s failure to adopt a governance framework, a council strategy, or operational guidelines.
Overall, the investigation’s findings confirmed that dysfunctionality was present within the B-BBEE ICT sector council.
Financial woes
Investigations into the B-BBEE ICT sector council found evidence of poor financial management and a lack of monetary policy.
The investigation noted that the council lacked a revenue management strategy and did not follow proper procurement policies.
It was also found that expenditure was often signed off by someone outside the council, while important procurement documents were often missing.
Along with this, several other financial reporting irregularities were found:
- Finance Subcommittee did not function for approximately six months.
- Financial reports were not presented to Council.
- Financial reporting consisted largely of bank statements rather than proper management accounts.
- Annual Financial Statements were not prepared or audited.
- Financial reports were inconsistent with the Council’s own financial policy.
“The investigation confirmed poor financial reporting, policy non-compliance, a dysfunctional Finance Subcommittee, and inappropriate authorisation of expenditure by persons outside the Third Council,” Malatsi said.
While the investigation found evidence of several governance and financial reporting failures, it found no evidence of wasteful expenditure.
It investigated two separate allegations of fruitless or wasteful expenditure, relating to advertising and council induction costs.
The advertising allegation was eventually found not to be wasteful, as it successfully attracted four bidders for the council’s strategy facilitator role.
Although no bidders met the requirements, the investigation found that the process achieved its intended purpose.
For council induction costs, it was found that R66,980 had been spent on accommodation and R46,000 on flights and shuttle services.
Investigators ultimately decided that this spending was justified, as new council members had benefited from the induction process.
The allegation that council funds had been deposited into a private bank account was also found to be unsubstantiated.
Investigators said the allegation amounted to hearsay because it originated from comments made during an induction process.
While rumours had circulated about the financial misconduct, no council member had any first-hand knowledge about the allegation.
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