Fronting by white-owned companies now ‘too sophisticated to detect’

White-owned companies have perfected the art of fronting – using black people as tokens to qualify for tenders – with the Broad-Based Black Economic Empowerment Commission saying this sabotaged the economy and scuppered opportunities for black people to play a meaningful role in the economy and its growth.

According to Zodwa Ntuli, the commission’s head, 26 years after the attainment of democracy, company ownership patterns remain unacceptable in SA. Since 2016, it had received more than 800 fronting cases for investigation and 386 had been finalised, while seven matters had been referred to the National Prosecuting Authority and South African Police Service for further processing, she said.

An additional 486 cases were still being investigated, with penalties of up to 10 years’ imprisonment or a fine of 10% of a business’ annual turnover. Convicted offenders may also be barred from doing business with organs of state. Despite a massive case load, the commission is also grappling staff shortages, which has hampered its work and it has pleaded with government to assist with more investigators.

But Ntuli said the commission was committed to strengthening efforts to tackle violations of the B-BBEE Act.

“We plan to enhance cooperation with law enforcement agencies because we believe dealing with violators will send a strong message to those involved in such activities and to society,” she said.

According to Deputy Minister of Trade, Industry and Competition Nomalungelo Gina, fronting and misrepresentation of broadbased black economic empowerment (B-BBEE) status by some companies was a demon that shattered SA’s transformation agenda.

She said fronting by white companies was a serious problem and had advanced itself to become too sophisticated to easily detect.

“Unfaithful entities have learnt how to blend their B-BBEE status to appear as genuinely complying with the codes. But, equally, because of desperation, these white companies find some willing black fronting tokens,” Gina said.

She urged the commission to be a bedrock upon which black participants could rely on to advance participation levels in the economy.

– siphom@citizen.co.za

For more news your way, download The Citizen’s app for iOS and Android.