He said fronting passive black faces hiding aggressive white money which the Broad-Based Black Economic Empowerment (B-BBEE) Amendment Bill outlaws, was unforgivable because it created the impression the economy is transformed when it is not.
Zuma was speaking at the two-day B-BBEE Summit in Midrand outside Johannesburg yesterday. The B-BBEE Amendment Bill, currently before the National Council of Provinces, makes provision for harsher fines and imprisonment for shareholders and directors of companies found guilty of fronting.
Zuma said the National Treasury had recorded more than R600 billion in BEE transactions since 1995. “According to Ernst & Young there have been more than 1 500 publicly announced BEE ownership transactions worth at least R533 billion.
“Most of the transactions involved JSE-listed companies. Of concern is that black participation in the economy continues to involve share ownership schemes in the main,” he said.
Zuma said that though the ANC-led government had made strides with regards to black economic empowerment and the growth of the middle class, there are still unacceptable levels of poverty, inequality and unemployment.
“Income equality in particular still remains skewed in terms of race,” Zuma said.
Trade and Industry Minister Rob Davies told delegates, “B-BBEE is a political imperative for redress. The Act will remove the burden on small black business to pay money to prove they are black. We found too much passive shareholding and too little empowerment of actors.”
A member of B-BBEE presidential advisory council, Sandile Zungu, urged the office of the BEE commissioner to prioritise fronting.
“We want to see culprits behind bars. Fronting penalties should include imprisonment of shareholders and directors and blacklisting of companies,” he said, adding that B-BBEE is not the panacea to many ills such as poverty and unemployment.