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Department of Trade and Industry Broad-Based Black Economic Empowerment Commission
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B-BBEE Commission host session to update on scourge of fronting and misrepresentation of B-BBEE status

MEDIA RELEASE

DATE: 19 October 2020

 

The B-BBEE Commission is hosting a webinar session to share with the public the investigation and enforcement cases received since its establishment in 2016, which include fronting, misrepresentation of B-BBEE status and falsification of B-BBEE certificates. The session is scheduled for 20 October 2020 at 10:00, with the address by the Deputy Minister of Trade, Industry and Competition, and includes representatives from the Special Investigating Unit, National Prosecuting Authority and Companies and Intellectual Property Commission.

The B-BBEE Commission was created following the 2013 amendments to the B-BBEE Act to oversee the implementation of the B-BBEE Act, which includes receiving complaints and acting against fronting practices and other violations of the B-BBEE Act. The B-BBEE Act requires all organs of state and public entities include B-BBEE requirements in determining qualification criteria for issuing of licences, concessions, or other authorisations, developing and implementing preferential procurement policy, determining qualification criteria for sale of state owned enterprises, developing criteria for entering into partnerships with the private sector and determining the criteria for awarding incentives, grants and investment schemes in support of B-BBEE.

 

Given B-BBEE requirements, some non-compliant entities as aided by consultants or advisors, and with the involvement of rent seekers in most instances, devised structures and schemes to circumvent the requirements to access government opportunities, which amount to fronting practice. The schemes range from basic ownership structures with one or two shareholders to complex structures involving thousands of people through multiple corporate vehicles that purport to have black ownership. In some instances, non-compliant entities simply bought B-BBEE certificates with a compliant status from unscrupulous verification agencies to access contracts, licences, etc.

 

In 2013 thus fronting and misrepresentation of B-BBEE status became criminal offences and the B-BBEE Commission was established by law as a regulatory entity to, amongst other things, investigate violations of the B-BBEE Act following a complaint or on its own initiative. The B-BBEE Commission is prohibited from publicising its findings where a matter it has investigated has been referred to the criminal law enforcement agencies or where the parties have decided to initiative a judicial review in respect of the findings of the B-BBEE Commission on a matter. As at 30 September 2020, the B-BBEE has 822 matters, with over 80% relating to fronting practices and mining, transport and construction accounting for the majority of the fronting complaints, 386 cases have been finalised.

 

The session is therefore meant to provide an update on cases of fronting and misrepresentation of B-BBEE status that have been investigated as part of the communication strategy of the B-BBEE Commission to raise awareness of these practices that are detrimental to transformation and criminal in nature, with a view to identify and prevent them from occurring in our economy. Special focus will also be placed on the characteristics of these cases, investigation outcomes as well as measures that government, companies and B-BBEE beneficiaries can put in place to ensure compliance.

 

The speakers will be Ms Zodwa Ntuli, B-BBEE Commissioner, Ms Moipone Kgaboesele, Executive Manager, Investigations and Enforcement, B-BBEE Commission, Adv Isaac Mphela, Acting Regional Head for the Northern Cape Specialised Commercial Crime Unit, National Prosecuting Authority, Mr Nkululeko Norman, Senior Investigator in Enforcement, Companies and Intellectual Property Commission and Takalani Ramovha, Special Investigating Unit who will share insight in respect of the processes and the role of the entities in question.

 

The public and private sector, news editors, journalists and the media fraternity at large, and the public at large are invited to join the B-BBEE Commission on the webinar link.

Zoom link:  https://zoom.us/webinar/register/WN_yhN-HAyKRB6Q3pqQTjwBzQ

Facebook Page:  https://www.facebook.com/bbbeecommission

 

Issued on behalf of the B-BBEE Commission by:

 

Sidwell Medupe - Departmental Spokesperson
Department of Trade and Industry
Tel: +27 12 394 1650
Mobile: +27 79 492 1774
E-mail: MSMedupe@thedti.gov.za
Follow us on Twitter: @the_dti

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