Accountants, agencies to be targeted for fronting

Thursday, November 11, 2010

Cape Town - In a bid to clamp down on BEE fronting, the Department of Trade and Industry is looking into whether verification agencies and directors of companies should be held responsible when the practice is discovered.

Briefing the media in Parliament following the fourth meeting of President Jacob Zuma's Broad-Based BEE Council on Thursday, Minister of Trade and Industry Rob Davies said fronting was "pretty rife" and that it was often accountants and verification agencies which advised companies on how to effectively front.

Davies, who chaired the meeting as Zuma is in Seoul for the G20 meeting, said the department was also developing some institutional capacities to tackle fronting. Fronting is already an offence in terms of misrepresentation and fraud.

"This practice is disempowering people who are supposed to be empowered and is also drawing a benefit from government, parastatals or whoever, which shouldn't be there," he said.

The department had also begun reporting complaints of fronting to the Special Investigating Unit for further investigation.

Nomonde Mesatywa, the Department's Chief Director of BEE, said the department referred about three to four fronting complaints to the SIU every week.

Meanwhile, Davies said the council was also looking at some useful propositions on how enterprise development can be advanced, in particular with other government interventions.

The council also had a serious discussion around import fronting - where a middle person is used to import goods from China or elsewhere.

"BEE is not just something that is of concern for black people. BEE is not only a political, but also an economic imperative that we are not going to get our economy to grow or develop if it is only based on participation by minority of the population," he said.

He added that this had become more real now in the wake of the global economic crisis which revealed that countries which had more developed domestic markets and production capabilities had in many cases escaped the worst of the recession.

"The council is not just a talk shop because we are asking them to come up with concrete measures, to certain issues, some of which have been around for some time," said Davies.

Davies said the council was also looking at ways at how to align BEE legislation with the New Economic Growth Path which is being led by the Minister of Economic Development Ebrahim Patel.

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