G4S on Slippery Ground in South Africa over Failing Empowerment Transaction

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Global security firm G4S
Global security firm G4S Logo (Photo Credit: Ujuh)

by Ujuh Correspondent

Global security firm G4S is facing a revolt in South Africa after its branch in the country made what appears to be a false employee share ownership plan (Esop) to its workers.

The affected workers are plotting a revolt that could shape up into a major political nightmare for the London Stock Exchange listed security firm.

When approached with questions for this story G4S declined to answer saying: “This is a commercially sensitive and confidential issue and we are not able to respond to these questions at this time.”

G4S Plc 2016 financial highlights: Source G4S 2016 Annual Report

It’s been 12 years since G4S South Africa promised its workers an Esop benefit which was packaged as a broad based black economic empowerment (BBBEE) initiative. BBBEE is a South African initiative to redress the racial imbalances of the colonial era.

And BBBEE is arranged as a regulation that yields economic benefits for firms. For example, a firm like G4S needs to show strong BBBEE credentials in order to earn government or general public sector business. There is a cascading effect as firms trade BBBEE credentials amongst themselves. And so, BBBEE credentials have become a business imperative in the country.

G4S has derived enormous economic benefit from the Esop/BBBEE deal it concluded with workers in 2005. The firm went around telling everyone who cared to know that it is an empowered -and an empowering- business with 26% BBBEE equity. It earned business on the back of a claim that it’s got sound BBBEE credentials. The reality for about 15 000 workers dispute this claim. If proven, such behavior is otherwise known as BBBEE fronting.

The workers who are supposedly beneficiaries of G4S Esop/BBBEE arrangement are crying foul. They have not seen a cent from their supposed shares in the company. Meanwhile management and the company have been singing all the way to the bank. This is clear from G4S’ client list in South Africa.

A group of current and former G4S South Africa workers has been engaging the company to claim their benefit for a number of years. The group calling itself G4S Workers Share Recovery Group has been sent from pillar to post to no end. They have held meetings with the company, protested, marched, signed petitions and boycotted. The G4S Esop has not yielded a cent for the poorly paid mainly security guards.

They are upping the ante. They are going political. They are appealing for help from civil society and political parties including the ruling party, ANC, and opposition parties like the Democratic Alliance and Economic Freedom Fighters (EFF). This could give their campaign a political edge that could add up into immense pressure for G4S. That will be particularly the case if their course is supported by the left leaning EFF which recently took on H&M for the “Coolest monkey in the jungle” affair.

Gifford Mbambo, who has been with the process from the beginning, explains why they are seeking a political intervention. “We’ve tried everything possible to secure what is due to workers and the company has not delivered. Instead G4S has toyed with us since we started this process in 2012.”

He adds “They’ve negotiated in bad faith by shifting goal posts and even making false promises. It would seem that all along they have been buying time to either make the deal fade away or deplete the beneficiary base.

Some of the people we started the process with have since died and many are no longer within the employment of G4S. While there has been natural attrition of the 15 000 or so beneficiaries of the deal, the company has also played a role. After we engaged with them they targeted some of our members, especially the activists and committee members. Many have been fired and languishing in poverty”.

They were obviously banking on the trust deed which states that only individuals who are in the employment of G4S qualify to benefit from the deal. And so getting rid of those people was their strategy to reduce the number of beneficiaries. But most importantly, we think that, they calculated that getting rid of the instigators will free them from the obligations of the deal.

“We are sick and tired of their games. We are appealing to politicians and the broader South African public to help us secure justice,” said Mbamb.

This can prove to be cumbersome for the global security giant G4S.

With operations in more than 90 countries, an employee base of about 600 000 people and revenue of more than more than £7 billion (about R112 billion), a firm of its size and calibre does not need the type of political noise that can be sparked by this appeal in the age of the rising commoner. news@ujuh.co.za

 

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