Newsletter No. 04 / 12 February 2021
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Playtex factory liquidation leaves hundreds without work in SA
Hanes South Africa, which holds the licence to manufacture, sell and distribute underwear under the Playtex trademark in South Africa and several other African countries, has filed for voluntary liquidation.
The 60-year-old company’s factory in Mobeni East has been shut since early January, according to an IOL report, leaving over 700 employees without work. Staff were notified via email and SMS on 13 January that the business had filed for liquidation on 6 January and that all activities were immediately suspended. Employees were paid their salaries and benefits until 15 January.
In a statement released by Hanes South Africa, the company said: “After careful consideration, the board of HSA has decided to file for creditors voluntary liquidation as it believes this will be the best outcome for staff and other affected parties. The decision to file for liquidation follows the placing in business rescue of a major client of the business, as well as the ongoing poor economic conditions in South Africa, which have been exacerbated by the impact of Covid-19.
“We are committed to ensuring our employees are treated fairly and that they will receive all termination rights in respect of South African labour laws. All activities are suspended with immediate effect and our premises at Lawley Street 101, Durban are closed until further notice.”
Hannes South Africa began life as an underwear manufacturer in 1970 under the name DB Apparel. It became Hannes South Africa in 2016 when the Durban company was acquired by HanesBrands Inc, a global manufacturer and marketer of underwear, for an undisclosed amount. Bizcommunity
Tribunal approves Blue Falcon, John Craig merger: 422 jobs saved
422 jobs will be saved as a result of the large merger whereby Blue Falcon 188 Trading (Pty) Ltd (“Blue Falcon”) will acquire certain portions and assets of the “John Craig” Business, a Division of Pepkor Speciality (Pty) Ltd (“the transferring business”).
The transaction is taking place against the background of several John Craig store closures and staff retrenchments due to financial difficulties faced by the transferring business.
The Tribunal has approved the transaction subject to public interest-related conditions. In particular, they relate to employment and local procurement concerns. In regard to competition concerns, the Tribunal has found that the merger is unlikely to substantially prevent or lessen competition in any relevant market in South Africa.
The 422 employees of the transferring business will be transferred to Blue Falcon in line with the provisions of section 197 of the Labour Relations Act. This excludes certain executives who have concluded “opt–out” agreements and voluntary separation agreements with Pepkor Speciality.
Moratorium on retrenchments
Blue Falcon will not retrench any employees as a result of the merger for a period of two years from the merger’s implementation date.
Preference to already retrenched employees
In terms of the merger conditions, both Blue Falcon and Pepkor Speciality should give preference to eligible John Craig employees, who lost their jobs as a result of store closures, when new vacancies become available, for a period of two years from the implementation date of the merger. Internal vacancies must also be communicated to the affected former employees
In addition, Blue Falcon and Pepkor Speciality must establish a database of the former employees and make this database available within Pepkor Speciality and John Craig for the purpose of availing employment opportunities to them.
The Department of Trade, Industry and Competition earlier raised a concern about the effect of the transaction on local procurement i.e., whether the John Craig stores will maintain the same ratio of procurement of apparel products from South African manufacturers.
Blue Falcon, as the acquiring firm in this transaction, has therefore agreed to a condition that it will use its best efforts to procure the labels it intends to offer at the John Craig stores from local manufacturers.
The merger parties will be required to provide the Commission with detailed reports annually, for a period of two years, regarding their compliance with the conditions.
The Blue Falcon group is an independent retailer specialising in sports-lifestyle, “athleisure” oriented men’s clothing, footwear and accessories. It sells international sporting, leisure and lifestyle brands to various emerging market consumer segments throughout sub-Saharan Africa. These brands include Adidas‚ Ellese, Puma‚ Converse‚ Nike‚ Guess‚ Superga and Levi.
The transferring business mainly sells smart and formal men’s apparel including chinos, formal footwear, jackets, knitwear, coats and suits. It owns an in-house label, “Muratti”, which has been specifically designed for the John Craig customer and is the largest retail stockist of the “Polo” brand in South Africa.
SIU recovers R127m worth of dodgy PPE payments so far
By Marleny Arnoldi
The Special Investigating Unit’s (SIU’s) work has resulted in the recovery of R127-million of funds, which had been paid irregularly by the State to service providers of personal protective equipment (PPE) and related services.
This was revealed on February 5 as SIU head Advocate Andy Mothibi provided details of his findings in the investigation into allegations related to State institutions’ procurement of Covid-19 PPE.
In the wake of the Covid-19 pandemic, the procurement process for PPE had been abused for undue financial gains.
President Cyril Ramaphosa in July last year signed a proclamation that allowed the SIU to probe the unlawful conduct in Covid-19-related funds.
Emergency procurement measures were implemented by the National Treasury and then by all levels of government and provinces after the lockdown came into effect in March last year.
The SIU processes litigation matters through the Special Tribunal, or recommends disciplinary action against individuals from State departments, or other referrals to regulatory authorities such as the National Prosecuting Authority (NPA).
Officially, 180 corruption allegations were reported to SIU as at November 25, 2020, of which 51 related to national government, 34 to the Gauteng provincial government, 24 to the KwaZulu-Natal provincial government and the balance across the remaining provinces.
About R30.7-billion was spent by State institutions on PPE-related goods and services between April and November 2020. Of that amount, R13.3-billion was subject to SIU investigation.
Over the period under investigation, 2 556 PPE contracts were awarded by State institutions, amounting to the R13.3-billion under investigation.
These contracts were awarded to 1 774 service providers, of which 164 contracts, or 26% of the contracts, warranted further investigation.
Mothibi said the SIU’s investigations revealed that persons of authority within some State institutions believed that all procurement since the National State of Disaster declaration were to be done on an emergency basis, which was not the case, leading to many processes and contracts not adhering to certain minimum prescripts to remain cost competitive, transparent and fair.
He added that many service providers who were awarded contracts only registered their businesses in February and March last year and, therefore, did not have demonstrated records, as required for procurement contracts.
Some were also in the deregistration process when they were awarded projects.
In other instances, contracts were awarded for products that companies did not supply, while product specifications were ignored in other instances.
Mothibi said it was a widespread problem that departments did not attempt to negotiate with service providers to bring prices down, resulting in many overpayments.
He also found that departments lacked basic control measures to ensure correct product delivery – since the SIU had found many instances of underdelivery of items.
Moreover, the SIU’s investigation revealed that some service providers were paid for value-added tax claims, but were not registered with the South African Revenue Service as vendors.
“We also found that suppliers used ‘front’ companies to obtain more contracts. They were effectively used as proxies for other companies.
“There were also instances of splitting of bids to meet the delegation threshold, as well as misrepresentation from suppliers – them not disclosing their close relations to each other.
“PPE was also often manufactured under false or cloned labels, thereby creating the risk that the product would not function as intended,” Mothibi explained.
The SIU’s investigation led to 15 matters, involving contracts worth R365-million, being heard by the Special Tribunal to date.
Mothibi said the tribunal can declare contracts invalid and set them aside, as well as freeze the assets of those companies or individuals implicated to avoid further transactions.
To avoid State officials resigning once they are implicated in a matter, the tribunal can also have their pensions frozen, pending the outcome of an investigation.
In addition to the funds recovered, the SIU has also determined that 25 government officials should undergo disciplinary hearings, while two will face administrative action.
The unit has also referred 38 matters to the NPA for criminal investigation, with allegations relating to fraud and corruption.
Some notable cases of questionable tender contracts that the SIU uncovered include the R139-million worth of PPE that was due to the Gauteng Department of Health by a proxy company.
The SIU intervened in time to save the majority of these funds being paid, while the balance has been ordered to be paid back to the department.
Civil proceedings within the Special Tribunal related to this matter and implicated individuals remain ongoing.
Another notable case relates to the Eastern Cape government’s procurement of “medical motorbikes” valued at R10-million, with the product ending up being not fit for purpose. The matter will be heard by the tribunal on April 28.
Mothibi expects the overall investigation to be wrapped up within the next six months. EN
Scalo’s Sello Medupe to present his designs at virtual Emerge! Fashion Show during NYFW
South African designer and founder of local fashion house Scalo, Sello Medupe, has been invited to showcase his designs at 2021 Emerge! Fashion Show, which will take place virtually on 16 February during New York Fashion Week (NYFW).
The show features top emerging designers during NYFW.
The Scalo fashion brand has consistently represented quality and style since being founded in 2009. It is the brainchild of Soweto-born Sello Medupe, whose designs are underpinned by passion and creativity, fused with the dynamism synonymous with a typical Johannesburg attitude. That of being modern, sophisticated and futuristic.
Scalo has showcased at Africa Fashion International (formerly known as Mercedes Benz Fashion Week) since 2013. On the international scene, the brand presented at Torino Fashion Week, in Turin, Italy in both 2018 and 2019.
The brand was also commissioned with designing the first African Barbie Doll outfit that was successfully launched in 2019.
South Africa’s media royalty are regularly spotted in Scalo designs. The list of notable personalities are endless: former Miss SA Ntando Kunene at the Miss Universe pageant; hip-hop sensation Cassper Nyovest at the MTV Africa Music Awards; model and reality TV star Blue Mbombo; thespians Nandi Madida, Sindi Dlathu, Thembi Seete, Enhle Mbali Mlotshwa and Thando Thabethe; award-winning musician Lira; former Miss SA and Miss Universe first runner-up Tamaryn Green; and turntable extraordinaire DJ Zinhle.
The highly anticipated Emerge! Fashion Show, which will have a format that follows a live digital experience, will take place at a time when audiences are captive and in need of inspiration, and also where the industry will be on the lookout for top design talent. Each of the five designers selected (two from Africa and three from America) can present a maximum of eight well-constructed, superior quality and cohesive looks.
Emerge! Fashion Show will be hosted by Fashion Bomb Daily’s Claire Sulmers. Special guest presenters are fashion heavyweights Andre Leon Talley and Fern Mallis.
Leading up to the showcase, Port Authority of New York and New Jersey, one of the show sponsors, will be featuring one garment from the designers in each of their airports and train stations. This will be by way of creating videos of the various designs. Under the theme: “New York is the Runway to the World of Fashion!”, a model will wear each designer’s garment at one of the following locations: Laguardia Airport Terminal B, TWA Hotel at the JFK Airport, Christopher Street PATH station entrance, the World Trade Center PATH station platform and the Port Authority Bus Terminal. The location selected by Scalo is JFK Airport.
The videos will be screened on the Emerge! and Port Authority websites, the virtual show and across social media platforms. To register for free access click here.
Truworths – changes to the executive management
Truworths International Ltd. (the ‘Group’) announced that, in the process of implementing its succession plan for the Truworths Africa segment, Ms Sarah Proudfoot, an executive director of the company, has been appointed Deputy Managing Director of the Group’s main operating subsidiary, Truworths Ltd.
A number of further director and divisional director appointments have also been made within the Truworths Ltd. subsidiary, pursuant to the Group’s succession process. All changes are effective from 1 February 2021.
Did you know……..
“The fashion industry is responsible for 8% of carbon emissions” (UN Environment, 2019)
Some of the main sources of carbon emissions along fashion supply chains are things like pumping water to irrigate crops (like cotton), the harvesting machinery, general transport, and those pesky oil-based pesticides—all of which are inevitably increased in the notoriously overproducing world of fast fashion. By that score, we know that purchasing fast fashion items directly contributes to the global polluting machine that is to blame for 8% of the world’s carbon emissions.
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