The Black Business Council (BBC) has written to insurance giant Santam accusing them of sidelining and destroying black-owned panel beaters.
In a letter written to Santam CEO, Tavazina Madzinga a week ago, BBC president Elias Monage, accused the company of forcing black panel beaters to abandon their workshops and work for white-owned panel beaters as sub-contractors.
“It has come to our attention that Santam Insurance is making damaging procurement decisions that place our members at extreme risk,” said Monage in his letter.
He accused Santam of appointing a Taiwanese national, Filum Ho, as a procurement officer to lead its motor procurement department, while using his very own companies to do the bidding of which black panel beaters would be sub-contracted to his businesses.
He said Ho’s range of companies: GT Motive, Part Smart, Auto Boys and Car Scan that are in panel beating, car parts replacement and spray painting were benefitting from Santam as he is the one who exercises the power to tell black panel beaters where they should buy parts, automotive paints and other panel beating materials.
“This is an obvious conflict of interest… Surely, Mr Madzinga, you cannot condone this decision? It is one thing if Mr Ho was actually acting in the best interests of the industry, but he intends to use the power you have granted him to further his own capitalist agenda by profiting from black businesses…
“He may well have made Santam promises of higher profit by reducing repair costs, but he intends to do this by using his technologies to reduce repairer margins, and in so doing, carelessly destroying the repairers’ livelihoods,” said Monage.
Madzinga responded to Monage saying Santam embraces “transformation and [has] over the years engaged on various initiatives that led to an increased spend on black-owned businesses and growth of black intermediaries contracted to the Santam Group”.
“We will continue to explore ways to have dialogue with the aggrieved parties, with the aim of reaching an amicable outcome.”
A Johannesburg-based panel beater who asked not to be named also raised issues on how black-owned companies were treated like stepchildren by insurance companies.
“The insurance companies take business to their own white people and forget that we exist. My company’s name is registered in their vendor portal but they do not give me jobs, and this kills my business.”
A Free State panel beater commented: “We are all doing the same job and some of us are great at what we do, but these insurance companies choose to deprive us of opportunities because we are black. How can we grow while being suppressed and having doors shut on us by the same companies that benefit from black people as well?”
Ho said he could not speak for Santam but said: “In my personal capacity as a very minority shareholder of the companies that provide services to Santam, I can say that a single large panel beater for Santam would earn the same revenue per annum from Santam as both the companies I have a minority stake in, providing services to Santam.
“So, to clarify, just one large panel beater would make the same turnover as the companies I have a part of, providing services to Santam. One of the companies [in] which I own a 6.04% share, Autoboys – sells parts to panel beaters. I last worked there over two years ago. Since I left, I haven’t ever told any panel beater, black or not, to buy car parts [there],” said Ho.
Santam spokesperson Thabo Mabaso said that through the insurer’s progressive procurement practices, the company currently invests in thousands of value chain-aligned businesses – many of which are black-owned – by providing access to market, capital and skills.
“In 2023, Santam’s procurement spend exceeded R10-billion, with significant spend on both black-owned and black female-owned businesses. In addition, 57% of Santam’s motor body repair (MBR) suppliers are more than 51% black-owned.”
Mabaso said during 2023, 58% of Santam’s total MBR spend was directed to black-owned businesses and that for six consecutive years the company has maintained a Broad-Based Black Economic Empowerment Level 1 rating.
“Santam remains committed to transformation. We have contracted various consultants to advise Santam on its journey to implement and accelerate the diversification and optimisation of processes across our business. It should be noted that these processes have the intended advantage of benefiting all our stakeholders, including black-owned businesses,” said Mabaso.
