Former driver-owners sue ABI for USD 417 million
The case could not have come at a worse time for SABMiller as it seeks to get local approval for its sale to AB-InBev. Amalgamated Beverage Industries (ABI), the soft drink division of SABMiller’s local unit SAB, is being sued by 150 of its former employees, who say they were exploited under the guise of “black economic empowerment” policies.
Various media around the world reported in early December 2015 that the drivers were seeking 6.3 billion rand (USD 417 million) in compensation from ABI, claiming they were pressured to switch from being employees into “owner-drivers” to make it look as if the company had “empowered” them.
But the drivers argue that restrictive conditions and unfair contracts meant they went into debt, while SABMiller and ABI avoided liability under South Africa’s labour laws.
Eventually, many drivers say their contracts with ABI were summarily terminated when they could no longer make their payments to the company for stock and vehicles.
The “owner-driver” scheme is a major component of SABMiller’s CSR initiatives, and has ensured compliance with the government’s Black Economic Empowerment policy, South Africa’s version of affirmative action.
The case has drawn widespread criticism of SABMiller, a company that owns beer brands such as Pilsner Urquell, Grolsch, and Peroni and is the largest bottler of Coca-Cola products in South Africa.
“The story is simple: owner-drivers … were asked to resign from their jobs, promised a bump in pay, cajoled into signing absurdly unfair contracts, exploited to the bottom of their bank loans, and then allegedly terminated without cause,” wrote the journalist Richard Poplak on 6 December 2015 in an investigation into the case for the Daily Maverick Chronicle.
SABMiller and ABI deny that they have treated owner-drivers unfairly. “For the last two years we’ve been engaging with the ex-owner drivers who were not happy with being terminated,” said Tshidi Ramogase, ABI’s corporate director.
Media refer to the saga of Moses Mkhondo, a former employee, who in 2003 became an “owner-driver”. At first things went well. He was making more money than he had earned before. But as ABI began to cut costs – a process which accelerated after SABMiller took full control of ABI in 2004 – the company put financial pressure on the owner-drivers, altering the payment structure and reducing compensation.
By October 2013, Mr Mkhondo alleges, he owed ABI 340,000 rand (USD 25,500) – despite beating all of his performance targets, and winning a trip to Brazil for doing so. By November, this figure had ballooned to 747,000 rand (USD 49,000), and in January 2014 Mr Mkhondo’s contract was summarily terminated.
Following the Daily Maverick Chronicle’s investigation, the Economic Freedom Fighters, a self-declared Marxist-Leninist political party that has formed in opposition to the dominant African National Congress (ANC), has vowed to raise the matter in parliament.
In November 2015, SABMiller and rival brewer AB-InBev announced plans for a USD 110 billion merger, the largest transaction ever in the brewing industry. The merger is subject to anti-trust reviews in several countries.
