B-BBEE Fronters to Face Possible Life Imprisonment

This was one of the proposals coming out of the review of the Broad-Based Black Economic Empowerment (B-BBEE) Act ordered by President Jacob Zuma. The review was conducted by the presidential B-BBEE Advisory Council and its findings were recently announced by Trade and Industry Minister Rob Davies.

The Minister said a crackdown on the rampant fronting phenomena related to black economic empowerment looms with possible life sentences proposed for those found guilty of the practice. Fronting was the main issue discussed by the presidential B-BBEE Advisory Council and it has been classified as a fraudulent activity.

The substantially revised B-BBEE regulations are to be forwarded to the Cabinet for ratification before being put into law. Davies said that failure to comply with B-BBEE laws and regulations will be severely dealt with and attract severe penalties.

Member of the Presidential Advisory Council sub-committee on B-BBEE ownership and management control, Sandile Zungu said that fronting was an insult to those who were being taken advantage of. Fronting had in the past, at times, created joint ventures with ghost principals who when it was time for the proceeds to be shared, were simply fired.

Tsakane Maluleke, a member of the advisory Council`s sub-committee on B-BBEE legislative instruments said that the Advisory  Council  had beefed up all the "grey spots" in the B-BEE Act, the regulations and the Codes of Good Practice. "Fronting will be something of the past and there will be no way out for such activity", he said.

Davies said the proposals focused strongly on the ‘broad based elements’ including ownership by communities, increased skills development and support for small business enterprises. Further, the redrafted codes supported procurement from emerging black business which was often overlooked in the past. The new B-BBEE dispensation will ensure mistakes in the various Codes of Good Practice were corrected and applied consistently.

It also begs the question whether public officials aiding and abetting fronting, when exposed, will spend lengthy periods behind bars.

Pieter Rautenbach