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KWV defends empowerment progress after SAWIT pull-out

Published:  23 July, 2008

KWV has denied that the South African Wine Industry Trust's (SAWIT) decision to withdraw its loan of R135 million (10.25 million) to the black empowerment group Phetogo Investments will detrimentally affect KVW's overall black economic empowerment (BEE) strategy.

In 2004 Phetogo became a major shareholders in KWV - one of South Africa's largest wine companies - after it's acquisition of 21.5% of the business. As KWV was formerly state-owned, this was considered to be a milestone in the furthering of black empowerment within the wine industry and South African agriculture as a whole. The scale of the investment also ensured the inclusion of two representatives from Phetogo on the KWV board.

The reasons originally given by SAWIT chief executive Charles Erasmus for the withdrawal of funds were that the envisioned transformation goals were not realised' and a research report on the effectiveness of Phetogo as a driver of black empowerment within KWV revealed that Phetogo's interest groups did not succeed in working together as an integrated unit'.

Dr Willem Barnard, CEO of KWV, refuted these claims and told Harpers: SAWIT admitted late last week that the reason it was withdrawing funding was due to its own cash flow problems and not so much that the transformation goals had not been met.'

Erasmus had also indicated that SAWIT -the government body charged with developing black empowerment in the wine industry - was in negotiations with possible investors to take over the financial role. Barnard confirmed: There are several interested parties wanting to purchase the shares, including previously disadvantaged individuals who see great value in KWV. Thus the BEE deal is not in jeopardy.

KWV's empowerment status will not be affected by the proposed deals and remains one of the largest in the South African agriculture.

The investment made by the black shareholders in KWV has proved to be successful, with a growth of around 85 % over the two years since the signing of the empowerment agreement.'

Regarding the current status of KWV's relationship with SAWIT, Barnard told Harpers: KWV made its last payment to

SAWIT two years before the due date and therefore has no further financial commitments to SAWIT, but fully supports its initiatives.'

Phetogo's interest groups include the Black Association of the Wine and Spirits Industry, the KWV Employees Investment Trust, South African Liquor Traders Association and Phetogo Investment Holdings.

KWV wines are imported into the UK by Edward Cavendish.