Fin24

Amendment bill to tackle fronting

2012-04-04 08:57

Pretoria - The gazetted broad-based black economic empowerment (BBBEE) amendment bill will put in place strict measures to tackle fronting, Trade and Industry Minister Rob Davies said on Tuesday.

"What we are doing is defining it much more closely in the bill so that there is a specific statutory offence of fronting," Davies told reporters in Pretoria.

Fronting is when companies pretend to be compliant with the act by placing blacks in positions that would make them seem as if they either own the company, or are at a level to make decisions in the company.

"Now that would be a fraud because you are trying to do that because you want to get a regulatory benefit, or present yourself as something that you are not, and that is fraud."

Davies was speaking after a presidential BBBEE advisory meeting which reviewed the progress of the act and the codes of good practice.

He said a commissioner would be assigned to solely focus on fronting. The commissioner would receive and investigate cases of fronting, correct the situation and, in extreme cases, he would have the authority to prosecute those involved.

"The problem is we haven't got provisions in place to catch fronting... ordinary law enforcement officers don't have the capacity to go and investigate transactions of that nature to see where fronting is taking place."

Currently those found guilty of the practise can be charged with fraud and face imprisonment.

"So we are introducing a BEE commissioner who will be charged with looking into the matter," he said.

Davies said the objective was to provide ways to measure the degree to which an individual was involved in empowerment.

Council sub-committee chairperson Sandile Zungu said they were focusing on fronting because it infringes on human dignity.

"If we are to build a society based on justice then fronting has no place in our society."

Zungu said the practice had reached the stage of "aggressive fronting".

The minister said the amendments to the bill would ensure BEE contributed to the creation of real entrepreneurs in South Africa.

"It opens up new opportunities for black business people who are active players in the economy, and are not passive shareholders in somebody else's business." 

Comments
  • dewald.galjaard - 2012-04-04 09:13

    Zungu said the practice had reached the stage of "aggressive fronting". And why you think is that? We're all African. All of us are entitlled to the same rights and opportunities.

      Liam - 2012-04-04 09:30

      Of course we are, but the wrongs of the passed must be redressed. Face facts, BEE is here to stay. Not applying the principles properly only sets us back from the ultimate goal of a society where a person is always chosen because they are the best man for the job, without the need for bias. Unfortunately it is not being done properly, and this act seeks to make that an offence and punishable.

      Felix - 2012-04-04 09:40

      @Liam, The kids leaving school these days are all from equal schooling under our 'illustrious' anc systems. They all have the opportunity to follow a tertiary education. When will a sunset clause be introduced to these racist business principals?

      Stille - 2012-04-04 09:40

      @liam - what about the wrongs of the present? Its hippies like yourself who will be the 1st to take your family overseas when this country fails. BEE is reverse racism and its placing uneducated buffoons in postions they do not deserve or grasp.

      thabani.alfred - 2012-04-04 09:44

      And back than when yol use to opres us our rights didnt matter. Its only now that you see that we are all Africans??

      Benn - 2012-04-04 09:52

      Then you still have fools who actually believe that BEE is a temporary arrangement. The title"BEE Commissioner" is just a revised name for "BEE Commissar"

      Greg - 2012-04-04 10:12

      How does a country like SA move forward? Must everything remain as it was as at 1994? SA has a unique history and will have a unique future. We cannot use the models of any other country to bring about social and economic justice and equality. There are simply too many cultures and dynamics to have a "one size fits all" policy.So any Government (ANC or DA, etc) of this country would have to initiate something rather than nothing to bring about transformation in our unique environment. A sunset clause would be good at some point, obviously. At present the BEE act is that initiative that in time may evolve for the better / worse, only time will tell. As for SA going down the drain, that would be the thinking of the "when-we's", which is a self-defeatist mentality. SA is a unique democracy and our learning curve is young and sometimes painfull. Europe, USA and others have gone through this cycle. Be Proudly South African.

      Spyker - 2012-04-04 10:49

      But the entire state is a 'front company'... The (current) state consists of almost exclusively incompetent people - viz the front - behind them served by a plethora of 'consultants' (i.e. the currently disadvantaged). The entire ANC state-function will break its own law by virtue of its mere existent. Then again - gross incongruities in the laws it tables has never stopped the ANC regime before...

      Greg - 2012-04-05 13:00

      The dislikes are an indication of the mindset that is locked in the past yet disingeniously playing the victim card in the present hoping for a collective amnesia from like minded people. Preserving the lie long enough and hard enough will not make it the truth and such minded people will only become bitter, resentful and hateful when they are left behind in SA's bright future. Bring on the thumbs down!!

  • Herman - 2012-04-04 09:13

    Fronting is not the biggest problem, crony tenderpreneurship is, why not go after those crooks?

      Benn - 2012-04-04 09:50

      Why would they? They are all ANC

      Herman - 2012-04-04 09:59

      So true Ben, incompency and corruption rules SA, with the support of idiots.

      Alf - 2012-04-04 10:08

      To avoid family infighting within the ranks of ANC and government members. I hope they will further tighten labour lawsas well. Maybe then some of the big companies will decide to close shop! As far as I am concerned BBBEE is either a very big bee or a bee that stutters!

  • Frank - 2012-04-04 09:18

    We shall stop fronting when the BEE people we employ start to shoulder the responsibility that comes with the position. We have seen many times that as soon as the responsibilities are pressed. the BEE appointee folds, shouts racism and demands absurd amounts of compensation. Sort that out and we shall start playing ball!

  • richard.castelyn - 2012-04-04 09:50

    You should GIVE away half your company and then find a person who could actually contribute!?!? If it was that easy to find black people who can contribute to a company and that know how to make decisions BEE would never have been a problem. Most companies would appoint anyone who can contribute! The goal of all companies is profit maximisation. You would appoint anyone who pulls their own weight and increase profits! The black people who contributes and know how to make decisions also doesn’t need BEE! If I was black and know I was appointed only for BEE purposes I would be ashamed of myself! You’re too stupid and useless to get a job on your own. You have no pride. You have to be spoon fed or else you would die. If I was you I would go out and thank everyone who contributed to apartheid. You need a reason to get special treatment. Without it you can’t compete in the real world! You and everyone who needs AA are the self elected charity case of the world...

      Gestoffle - 2012-04-04 14:12

      Hey Richard, that was a fantastic comment. It is absolutely true to the finest detail. But I think we are f*rting against thunder with the masses. However, we will make a plan fairly soon to circumvent these befoons. Unfortunately the foreign investors don't know the calibre of these so-called deprived. They will find out soon enough, if not already. Good luck

  • Denny - 2012-04-04 09:55

    Standard response to failed regulation - more (soon to fail) regulation.

  • Albert - 2012-04-04 09:57

    The question about BBBEE is, if I cannot compete on a level playing field, why do I have to pay the same taxes? This is using my tax money against me, so I am paying this government to discriminate against me!!!

  • thabani.alfred - 2012-04-04 10:02

    Very good!! I hope these fronters/fraudsters be arrested soon!! They are still exploiting black people.

      Frank - 2012-04-04 10:49

      And the black people are still exploiting their privileged position as BEE untouchables to defraud companies from hard won profits. If you are willing to shoulder your fair share of the work, I'll fairly compensate you for your effort, otherwise my company will stay under the R5 mil threshold to be an exempt SME. I can live comfortably with my profits without having the punitive BS to try and accommodate a lazy BEE appointee!

  • Den - 2012-04-04 10:04

    yes after 20 years we still need bee? the majority rules for 20 years, but they still need protection in the work place? does anyone see the irony in this??????/

      Daan - 2012-04-04 10:56

      South Africa is the only country in the world where the 91% majority needs laws to protect them from the 9% minority. The majority's incapability to create their own wealth, (as demonstrated by the rest of Africa) is a sad reality.

  • Den - 2012-04-04 10:05

    91% is protected from 9%, hell somethings wrong with this picture.....

  • Den - 2012-04-04 10:06

    south africa is now a place for sheltered employment

  • Ian - 2012-04-04 10:06

    Then they must contribute to the business and not demand high salaries for doing nothing.........!!!!!!!!!!!!

  • karen.inward - 2012-04-04 10:16

    I don't really understand the problem with fronting. If an illiterate and uneducated person is used to "front" a company, this person still owns 51% of the company and derives financial benefits he would otherwise not get at all. It is unrealistic to think that this person must be educated / brought up to speed - just not possible. BUT why is this a problem? Yes I can think of many black people who are smart & educated and would be excellent business partners and contributors, BUT why should the uneducated not get any benefit from BEE? To argue that fronting affects their dignity is idealistic nonsense - whoever says that has not tried to support a family on a domestic / gardener salary.

      Daan - 2012-04-04 11:04

      @karen.inward! The real question from a business point is: how did this uneducated person obtain the 51%. Was it "given" or was it "bought" No clear thinking business person "gives" for nothing! That will defeat the object of being in business. To "give" 51% of nothing, and build it up to "something", now that is a different story, and I see nothing wrong with it.

  • Zengfuey - 2012-04-05 08:23

    When will the minister tackle "fronting" by family, friends and political acquaintances of the well connected, who by the very fortunate position of them being family, friends and political acquaintances of CEO's and board members of parastatal financial institutions get easy access to funds. And these fortunate individuals very often balk at the idea of paying back their loans with impunity. All because government wants to empower the already empowered.

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