Time barring – B-BBEE Commission

01 Nov 2023

The B-BBEE Commission (the “Commission”) is empowered in terms of the Broad-Based Black Economic Empowerment Act 53 of 2003 (the “Act”) and has jurisdiction throughout South Africa. The Commission is charged, among other things, to oversee, supervise and promote adherence to the Act in the interest of the public and to receive complaints in relation to any non-compliance with the Act.

The Commission must execute its functions in a reasonable and timely manner, specifically in relation to the investigation and findings relating to complaints.

Recent case 

In Interwaste (Pty) Ltd and Others v Broad-Based Black Economic Empowerment Commission and Others (34095/21) [2023] ZAGPPHC 1179 (5 July 2023), the Pretoria High Court dealt with an application to review and set aside the final findings of the Broad-Based Black Economic Empowerment Commission (the “Commission”).

On 3 February 2021, the Commission issued its final findings following an investigation based on a complaint by Mr Juris Ronny Mekgwe, which he had lodged four and half years before on 17 August 2016. In its final findings, the Commission found that the applicants had committed the offence of fronting and had undermined the objectives of the Act.

Notably, the Commission had failed to comply with Regulation 15(4) of the Broad-Based Black Economic Empowerment Regulations of 2016 (the “Regulations”). According to this regulation, a complaint must be investigated, findings must be made, and a report must be issued within one year from the date when the complaint was laid.

The Court noted that the Regulations provided for an extension of one year in terms of Regulation 15(15):

“(15) If the Commission is of the view that more time is warranted to conclude its process in respect of an investigation as contemplated in sub-Regulation (8), the Commission must inform the complainant of the need to extend the time, the circumstances warranting a longer period, and the exact period required as an extension.”

The Court held that it is a matter of logic that Regulation 15(15) should be implemented before the investigation period expires and that Regulation 15(4) would be of no consequence if an extension could be granted any time after the expiry of the one year.

There were numerous extensions. The Court observed that after having received the further extension from Mr Mekgwe for six months on 13 September 2018, the Commission, in any event, still needs to finalise its investigation within the six months as requested. Instead, the Commission only issued its findings on 3 February 2021, i.e., two years after the last extension for it to file the final findings.

The Commission alleged that capacity constraints caused the extraordinary delay. In this regard, the Commission explained in its answering affidavit that the official who dealt with the report resigned from the service of the Commission at the end of June. The Court held that the relevant official was not involved and did not sign any of the reports compiled by the Commission. In light of these circumstances, the Court rejected the evidence that the delay was caused by the “official who dealt with the report”.

Legal principles 

The Commission further argued that it should be held that the time bar in Regulation 15(4) is merely procedural and not a substantive one, as it would defeat the Act’s purpose and undermine the Commission’s work. In this regard, the Court held that the Commission did not take cognisance of the fact that a pending investigation by the Commission may have devastating consequences on the accused party in conducting its business while under investigation for an indeterminate period.

In conclusion, the Court stated that even if it was found that the time bar in Regulation 15(4) is condonable by the Court, there was no application or any reliable or credible evidence before the Court that would constitute an application for condonation or that would constitute good cause for condoning the Commission’s reckless delay in finalising its investigation.

The Court accordingly found that the Commission acted beyond its powers when it issued its findings in breach of the empowering provisions of Regulation 15(4).

In light of the above, and for other reasons, the Court held that the decisions and final findings of the Commission were tainted to the extent that they were irregular and in violation of PAJA as well as the principle of legality. In addition, the Court held that once a ground of review under PAJA has been established, the Court is enjoined to declare the decision or finding unlawful. Consequently, the Court ordered that the final findings made by the Commission were unconstitutional, unlawful and invalid, and, therefore, reviewed and set aside.

Conclusion 

Where the Commission has failed to issue its final findings within the prescribed one-year period in Regulation 15(4) and has failed to obtain extensions under Regulation 15(15) properly, there may be grounds for review. Contact an expert at SchoemanLaw for assistance.

See also:

• B-BBEE – Still an integral part of state organs’ preferential procurement policies
• A critical analysis of the BBBEE Commission in adjudicating fronting cases
• Presidential BBBEE Advisory Council up and running
• Fronting under the BBBEE Act

(This article is provided for informational purposes only and not for the purpose of providing legal advice. For more information on the topic, please contact the author/s or the relevant provider.)