September 2017

The BEE fronting means a deliberate bypassing or attempted escape of the B-BBEE Act and the Codes by the Company, Close Corporation , Trusts or private individuals.

The fronting commonly involves reliance on data or claims of compliance based on misrepresentations of facts, whether made by the party claiming compliance or by any other person.

During the course of the “fronting”, the employees (notably black people), shall carry on with their respective daily normal duties unaware that the he or she is Director or shareholder in the company or close corporation he or she is presently attached to. The boss shall urge him or her (employee) to sign certain documentation while unacquainted of the authenticity of the document’s content therein. During the fronting process, the company or CC shall acquire big tenders or government contracts whereas the poor employee does not derive in return any benefit from his or her shareholding.

The victim of the “fronting” may not remain silent as he or she has the number of the options at disposal.

He or she may lodge a complaint with the BBB Economic Empowerment Commission which has the powers in investigating fronting practices, to issue summonses, subpoenas and interrogate witnesses and alleged offenders; institute court proceedings to restrain any breach of the BEE Act, including a fronting practice or to obtain appropriate remedial relief,

If the Commission is of the view that any matter that it has investigated constitutes a criminal offence in terms of the BEE Act or any other law, it must refer the matter to the National Prosecuting Authority or the relevant unit of the South African Police Service.

The BBBEE Amendment Act provides that any person who knowingly engages in a fronting practice commits an offence. The Amendment Act criminalizes fronting and other misrepresentations regarding the BEE status of an enterprise.

Any person convicted of an offence in terms of the BEE Act may be liable to a fine or a maximum prison sentence of 10 years, or in the case of a juristic person like a company or Close Corporation, a fine of up to 10% of its annual turnover.

Further, any person convicted of an offence in terms of the BEE Act may not, for a period of ten years from the date of conviction, contract or transact any business with any organ of state or public entity and will be registered in a register of tender defaulters with the National Treasury.

Other legal resort, the aggrieved party may approach an Attorney in an attempt to recoup what is due and owed to him or her.

Having said so above , we have recently successfully aided one victim of BEE fronting in the Free State High Court with the help of the seasoned Senior Counsel of the Free State Bar.

Mr.V.E Mavuya, Director, Mavuya Attorneys INC,

vuyisilemavuya@mavuyainc.co.za