BEE COMMISSION STRIKES HARD WITH ANTI-FRONTING STING

…orders two companies to cancel public seminar aimed at teaching businesses how to evade law protecting blacks
by Musa Ndlangamandla
In a display of zero-tolerance for entities that seek to undermine Black Economic Empowerment (B-BBEE) the B-BBEE Commission this week ordered the banning of a public seminar organized by two companies to teach people about how to circumvent the B-BBEE Act and practice fronting.
In the swift and stinging response to advertisements of the seminar, the Commission ordered the organisers to also refund prospective participants of their R2, 450 per person participation fee.
The public seminar titled: “FRONTING HAS A LEGAL ZONE. LET US SHOW YOU WHERE IT IS” which was planned for next month was to be held in Centurion.
Fronting refers to misrepresenting a business as black-owned and run in order to secure contracts, although the real decision-making is done by white people, who also reap the financial benefits. Fronting is a criminal offence under the recently amended B-BBEE Act.
“If a company is found to be fronting, we have provision for a fine of 10% of the turnover. Again, those individuals in the company could be imprisoned for up to 10 years or both. Another penalty could be that they are penalised from doing business with government for 10 years,” warns acting commissioner of the B-BBEE Commission Zodwa Ntuli.
Such practices create the impression that the company has complied with its BEE obligations. This allows the company to take advantage of the incentives that come with being BEE compliant, such as access to government tenders. But if the practices do not result in real transformation of the company or the flow of benefits to black South Africans, the appearance of compliance is illusory.
Ntuli paints a gloomy picture of the problem of fronting in South Africa, saying the majority of cases reported to the commission involve the practice.
“Out of the 33 complaints we received, 22 of them were purely on fronting,” she said.
“After being alerted by concerned members of the public, the B-BBEE Commission last week wrote to the organisers of the Fronting Seminar and expressed its concerns about the proposed seminar, and advised the organisers to present themselves for a meeting regarding the seminar. The B-BBEE Commission met with the organisers, who cooperated and duly presented themselves to the B-BBEE Commission today, 29 August 2016,” a statement from the Commission reflected.
The statement continued: “After perusing the details on the website www.frontingseminar.co.za, the B-BBEE Commission had noticed aspects that appear contrary to the objectives of the B-BBEE Act. The information on the website stated amongst other things that “Fronting has a legal zone. Let us show you where it is”, and further outlined the content of the seminar as seemingly seeking to give pointers on how to practice fronting in a manner that is safe.”
Several attempts by Transform SA to go onto the website proved unsuccessful.
Ntuli says any session, whether training, seminar or conference, purporting to teach or show people how to practice fronting safely goes against the objectives of the B-BBEE Act.
“Any person engaging in such a session clearly obstructs the performance of the duties of the B-BBEE Commission, and perpetuates circumvention. It is unacceptable to seek to give people pointers on how to get away with murder, which is a crime,” she explains.
“The B-BBEE Commission is considering the matter further, and engaging with the two entities, and will consider the provisions of the B-BBEE Act to bring this matter to a conclusion.”