Pretoria - The Black Economic Empowerment (BEE) Commission has spoken out on “rife fronting”, which it says continues to happen in the South African economy.
“…With the few complaints that we have, there is rife fronting and it continues to happen unabated,” the Commission’s acting Commissioner, Zodwa Ntuli, said.
Ntuli was speaking to media following the BEE Advisory Council meeting convened by President Jacob Zuma at the Union Buildings on Tuesday.
The commission, which started operating in April, has so far received 33 complaints. Twenty-two of these, the commission said, were “purely” on fronting.
“Our preliminary assessment is that there is merit to these complaints but because our investigations are confidential up until a finding is made, we will not be in a position to share who the parties are,” said Ntuli.
The commission was announced by Trade and Industry Minister Rob Davies in October 2015. At the time, Minister Davies said the commission will deal with fronting, fraud and other issues that affect BEE.
“The process to establish the commission started in September last year and so for the six months, we were involved in establishing the entity with all of the processes in government... That process has now been completed and effective from 1 April, we [have] now stepped into operations,” said Ntuli.
The commission now has the ability to address fronting as well as to introduce mechanisms to prevent it from happening.
“If a company is found to be fronting, we have provision for a fine of 10% of the turnover,” Ntuli said.
Individuals in the company could also be imprisoned for 10 years. Companies can also be penalised from doing business with government for years.
Getting stakeholders on board
Since coming into operation, the commission has engaged with stakeholders, which have given the commission its support.
The engagements have helped the commission to gain a sense of what stakeholders expect from it, while also gaining insight into the challenges faced by stakeholders and what can be done to address them.
These interactions with stakeholders have helped the commission to come up with a strategy and performance plan that Minister Davies has approved.
“It is important that as we monitor the implementation of the BBBEE Act, we look very closely into the quality of the transactions that are being concluded so that transactions are not concluded merely for compliance, but that they actually mean real BBBEE [in] real ownership and skills development that sees black people move from the lower levels of companies into the decision making positions in companies,” Ntuli said.
BEE deals, Ntuli said, had taken a “hit and run” approach in that they were made for a particular government department, in most cases leading to black ownership being diluted.
Black Industrialists Programme
On progress made by the Black Industrialists Programme, Minister Davies said the programme’s funding forum held its first meeting in March.
The funding forum is made of various agencies who have committed themselves to support this programme. The forum has received over 100 applications.
“It has received 107 applications. Many of these have been scrutinised, with some being sent back for further particulars. Five approvals have already been made,” said Minister Davies.
The finance will go in the form of capital support and incentive grants.
“These have received support to the tune of about R550 million, and that will support the retention of 300 jobs and the creation of 600 new jobs," said Minister Davies.
In his opening remarks at the meeting, President Jacob Zuma said the gathering was being held at a time when the South African economy faces tough headwinds due to slow growth in the global economy.
“However, there are signs that if we do things right, we stand a chance to turn around the economy and create jobs and business opportunities for our people.
“What has been remarkable in the past few months is the close partnership and collaboration demonstrated by government, labour and business in taking collective measures to turn around the economy and prevent a ratings downgrade.” – SAnews.gov.za
