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