Mike Melnick was not the OD programme’s Dr Frankenstein, but he was present to examine the monster when it awoke. “We were approached originally when ABI started OD to assist with the business advising side of it,” he said. “That very first weekend I remember vividly. It was in April 1993, and [South African Communist Party leader] Chris Hani was assassinated. The townships went up in smoke. And they couldn’t actually deliver their product, which kind of put the whole thing on a little bit of a poor start footing.”
Perhaps unsurprisingly, Melnick was enormously bullish regarding OD’s inherent possibilities. “We don’t find this to be a difficult programme at all,” he said. “If we pull our weight and we make sure that the guy’s financials are done properly, he complies with legislation, he does things correctly, disciplines himself with his spending, and doesn’t abuse the money. It’s so easy to spend money. You’re getting R50,000 when you were earning R5,000 as an employee. Wow, I mean, it’s like Christmas has come early.”
As far as Melnick was concerned, an individual owner-driver’s aptitude and work ethic were the main factor in his chances for success. “Possibly the thing that needs to be looked at closely is does the OD himself take responsibility?” asked Melnick. “He’s made the conscious decision to actually become an OD.” A second advisor, who spoke with Daily Maverick Chronicle on condition of anonymity, agreed. “The biggest single reason why it doesn’t work is the OD himself. Because, unfortunately, they develop an entitlement, which is common throughout this country.”
There are certainly good ODs and bad ODs, although the law of averages suggests that most land somewhere in the middle. At issue, however, is whether ABI made it impossible for even the best to succeed. M. Melnick Financial Services appears to have firewalled itself from having to consider this question, which would at the very least demand a close—or perhaps even a cursory—examination of the contract. “I haven’t seen an ABI contract for years,” Melnick said. “I think if they wanted me to have it, and if I wanted it, I could go to ABI and say so. But probably why I’m not worrying too much is—what impact do I have? All I’m looking at is what the guys are earning and trying to do the best with it. I’m not for a minute saying that the guys are getting enough money, or getting too much money. I mean, it’s not my call. I’m just doing my part of it.”
The conception of the OD business advisor was the result of an ugly piece of logic: the majority of the men SABMiller and ABI hoped to transform into independent entrepreneurs had emerged from the Bantu education system with almost no financial literacy whatsoever. The advisor’s job was to neatly and quietly bridge this knowledge gap. In practice, however, the arrangement was excessively paternalistic, and nor was it voluntary: from day one, ABI proffered a list of 10 approved business advisors, and an OD had to pick one.
But perhaps “business advisor” is something of a misnomer. Mike Melnick, by his own admission, doesn’t examine the contracts, knows nothing about B-BBEE legislation, and knows even less about trucks. Others are more forthright about their roles. “Short of wiping his arse, we do it all,” said a KZN-based advisor named Derek Moe. “And in some cases, we take the wives to Pick n Pay on Christmas and help them with the Christmas shopping. He needs only to drive his truck.”
Regardless, the business advisor holds the power over almost every aspect of the OD’s financials. At the start of the contractual period, an OD is compelled to sign a service level agreement. The advisors examine the tariffs, open a book, open banks accounts, and secure loans for vehicles. They ensure that the ODs are registered for the right statutory requirements: income tax, VAT, PAYE, and workman’s compensation. ABI pays into an account controlled not by the driver, but by the business advisor. Every month, the ODs are meant to meet with a driver and go over the financials, a task at M. Melnick Financials that is undertaken by Mike Melnick’s son, Warren. “We set up a meeting, and we say, ‘We’re going to be at your premises on this particular day. Please make yourself available to us so that we can actually go through your latest financial statements,’” explained Melnick.
“He must be joking,” said Moses Mkhondo, when asked whether this happened with any regularity. Whether or not the meetings are sloughed off by the business advisor or the OD, the gaps in consultation have been problematic. The family of an ex-OD named Raymond Pilane, now going blind as the result of diabetes, has shown Daily Maverick Chronicle evidence of the fact that Melnick kept paying insurance premiums on a truck for eight months after it was sold in January 2015. And even when M. Melinick Financials was performing perfectly, the ODs consulted for this investigation considered him an adjunct of ABI, and routinely mistrusted his counsel.
The business advisors’ bible is the tangle of numbers that form the rate card. Daily Maverick Chronicle has obtained a copy of the 2015 version, and it makes clear that OD remuneration is essentially a tale of two warring spreadsheets: costs vs compensation.