What is BEE Fronting?

03 Mar What is BEE Fronting?

Fronting is a dishonest and deliberate or attempted circumvention of the B-BBEE Act and the Codes. Fronting will involve reliance on data or claims of compliance based on the misrepresentations of facts.

When the awareness of Fronting came to the fore, it was often based on white business owners using people such as their gardeners and trying to pass them off as directors in their company. Fronting then developed into a more sophisticated process which implemented complex restructuring within companies and certain accounting measures.

The Broad-based Black Economic Empowerment (B-BBEE) Amendment Bill has been developed to make fronting an offence whereby fines and jail terms should become a huge determent to Companies.

There are more current forms of fronting that have used recently such as…

BEE Certificates with names of verification agencies being forged.
Using unaccredited verification agencies.
Using old and/or future financial year data to ensure that a Company’s turnover comes in below the threshold for QSE codes.
Using employee trusts where the ultimate beneficiaries are not black people.
Employees being placed in positions with no similar responsibilities and/or rewards to white people in the exact same positions.
Misrepresenting training costs with false invoices. 

The Department of Trade and Industry is collaborating with the police and have urged anyone with information on Fronting to report it to their call centre to help bring fronting to an end.

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