Some 33 complaints have
been directed to the recently
established Black Economic
Empowerment Commission
(BEEC) – 22 of which are
related to fronting.
That’s according to
acting commissioner of the
BEEC, Zodwa Ntuli, who
said that individuals in the
businesses could face jail
time of up to 10 years or a
fine amounting to 10% of
annual turnover if found
guilty.
In terms of current
legislation it is now
officially a crime for
companies to have broadbased
black economic
empowerment partners as
“fronts” and the BEEC now
has the power to redress
fronting and introduce
mechanisms to prevent it.
Ntuli was addressing
media in Pretoria recently
following the BEE Advisory
Council meeting. The BEEC
was officially launched on
April 1 this year.
“It is important that we
monitor the implementation
of the B-BBEE Act. We
look very closely into the
quality of the transactions,
ensuring they actually mean
real ownership and skills
development,” she said.
Minister of Trade and
Industry, Dr Rob Davies,
said that the new B-BBEE
Codes were designed to
eradicate practices such as
fronting. He highlighted
an example of fronting
where black people were
paid salaries of R3 000
per month as “managing
director” of a company.
Speaking at the Metals
and Engineering Indaba
recently, Shadow Minister
of Small Business, Toby
Chance, acknowledged
that there was still a
“very skewed ownership
structure” in South Africa.
He said that business
ownership was a “culture
that is cultivated over many,
many years”.
“We don’t have enough
people in SA with the
skills and knowledge
to successfully grow a
sustainable business, which
is why it falls to large and
medium-sized businesses
to step up and share their
knowledge and
provide the kind
of support needed
for small businesses to
grow,” he said.
He did question the 51%
ownership regulation in the
new codes, agreeing with the
Institute of Race Relations’
head of policy research, Dr
Anthea Jeffery, that even a
25% ownership requirement
was enough to deter foreign
direct investment.
“This is maybe why the
number of fronting cases
is increasing. It’s very hard
to sweat blood and tears
to build a business, only
to be told you have to give
more than 50% of it away
to someone you may not
even know very well,” said
Chance.
First 22 fronting allegations under investigation
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