Pretoria - FleetAfrica Eastern Cape (FAEC), which is part of listed diversified logistics company Super Group's fleet management subsidiary, Fleet-Africa, is facing a lawsuit by its black economic empowerment partner for allegedly using it as a front in a state contract.
FAEC was awarded a R731 million five-year contract by the Eastern Cape provincial government in 2003 for the outsourcing of its vehicle fleet. It bought the province's entire 3 000-vehicle fleet and took over responsibility for the supply, maintenance and management of the vehicles.
But the Dispatch Online reported yesterday that FAEC's empowerment partner, Kei Fleet Solutions (KFS), had lodged an urgent application seeking court intervention on several issues related to alleged fronting, management interference and non-compliance with contracts. The respondents are FleetAfrica, FAEC and the MEC for transport, Thobile Mhlahlo.
In an affidavit, KFS director Mkululi Pakade accused FleetAfrica of sidelining KFS and taking control of all management functions within FAEC. KFS "has been disregarded as a meaningful and active business partner in with the result that finds itself in a position where it operates as a front to meet black economic empowerment requirements".
Pakade also claimed that "poor administrative support" rendered by FleetAfrica to FAEC had "materially compromised" the quality of service to the Eastern Cape government.
Warren Thompson, Fleet-Africa's managing director, said yesterday that the company was aware of the court application.
He confirmed that FleetAfrica would oppose the application and had lodged an application for security of R180 000 from KFS to cover legal costs if KFS was unsuccessful. The application for security was due to be argued in the high court in Grahamstown yesterday, but Thompson was unaware of the outcome.
When the contract was awarded to FAEC in 2003, FleetAfrica had an effective black empowerment shareholding of 47.5 percent, with 25 percent owned by Kei Fleet Solutions, a private empowerment company comprising a consortium of local businesses. Empowerment company Peu Investment Group had a 30 percent stake.
In 2004 Peu Investment Group and black employees at Super Group acquired 25.1 percent of the listed company in a transaction valued at R1 billion.