BEE Fronting Thought Leadership – Andrea Swart
Unmasking B-BBEE Fronting: A Call for Genuine Transformation
By Andrea Swart, Head of Research, Methodology and Communities & Product Manager – BEE123 Verification Software.
As someone deeply passionate about meaningful transformation in South Africa, the issue of B-BBEE fronting is particularly close to my heart. Fronting, simply put, is any attempt to create a false impression of B-BBEE compliance. It’s like putting on a mask to hide the true picture, and it’s not just unethical, it’s illegal.
What Exactly is Fronting?
Fronting takes many forms, but it all boils down to one thing: circumventing the spirit and intent of the B-BBEE Act. This could involve anything from falsely claiming black ownership to creating artificial structures that don’t result in any real economic benefit for black South Africans.
Unfortunately, fronting was once a widespread practice, seen as a shortcut to securing government contracts and other benefits. But in 2014, the game changed.
The Amended B-BBEE Act: Fronting is Now a Crime
With the Amended B-BBEE Act of 2013, fronting was officially criminalized. This landmark legislation made it clear that those who engage in fronting practices are not just bending the rules – they’re breaking the law.
The consequences are severe: individuals can face up to 10 years in prison, and companies can be fined up to 10% of their annual turnover. Beyond the legal penalties, there’s the reputational damage to consider. Fronting erodes trust and can have long-lasting consequences for businesses.
Who’s Accountable?
The Act is very clear: anyone who “knowingly engages” in fronting is liable. This means that even if you didn’t intend to break the law, if you turned a blind eye to suspicious activity or failed to do your due diligence, you could still be held accountable.
Reporting Fronting: Our Collective Responsibility
We all have a role to play in combating fronting. If you suspect fronting, you can report it to the B-BBEE Commission. In fact, certain professionals, like verification agents and procurement officers, have a legal obligation to report any suspicions.
True Transformation: Beyond Ticking Boxes
At BEE123, we believe that B-BBEE is not about ticking boxes – it’s about creating a more just and equitable society. Genuine transformation requires a commitment to empowering black South Africans and creating meaningful economic participation.
Let’s move beyond the facade of compliance and work together to build a truly inclusive economy.
Sources:
https://www.thedtic.gov.za/financial-and-non-financial-support/b-bbee/fronting/
Amended Broad-Based Black Economic Empowerment Act 46 of 2013
https://www.bbbeecommission.co.za/lodge-a-complaint-process/
