Acting BBBEE Commissioner promise to fight fronting

9 Dec 2015

Ujuh Reporter

Companies that misrepresent their Broad Based Black Economic Empowerment (BBBEE) status to win government tenders will be exposed, prosecuted and excluded from doing business with the public sector.

This was part of a ‘no nonsense’ posture from the Acting BBBEE Commissioner, Zodwa Ntuli, who was addressing stakeholders. Ntuli’s engagement with stakeholders brings closer the realisation of the entity designed to police and monitor BBBEE.

Ntuli comes across as a tough nut to crack, an attribute well suited for the BBBEE Commissioner position. The position makes Ntuli one of the most powerful civil servants in the country who will from time to time confront and castigate captains of industry.

Ntuli dwelled on the need to flush out fronting during her presentation. She said fronting has become common practice where companies “misrepresent the B-BBEE status and manipulate the application of the codes to defraud government.”

Such culprits should not be allowed to continue to unjustly benefit from government procurement, said Ntuli.

She said that the B-BBEE Act has clearly defined what the Commission should be focusing on based on gaps that existed since the implementation of B-BBEE in 2003.

“Our review has revealed that the monitoring of transformation was not conducted diligently. We therefore must ensure that the Commission closes this gap. B-BBEE cannot continue to be applied in pockets, haphazardly and when people feel like it. We must be able to constantly measure the economic value of BEE transactions and verify whether they are measurable against the National Development Plan imperative of reducing poverty, unemployment and inequality. With this Act as revised now we will be able to zoom in on company reports and interrogate spending patterns to determine whether they are advancing transformation in real and sustainable terms,” said Ntuli.

She said fronting as a practice started off on a small scale and continued unabated to the point that it became sort of a norm. “Fronting has now become so complex and sophisticated, and made part and parcel of many BEE deals as if it is a legitimate practice. The Commission will focus on eradicating this practice, but more importantly it will focus on putting measures in place to prevent such practice going forward. B-BBEE deals, including those broad-based empowerment schemes will be scrutinized regularly, and monitored to detect this fraudulent practice. Fronting undermines transformation and is unacceptable.”

Ntuli added that there was also misalignment of government legislation to the B-BBEE legislation.

“The B-BBEE Act creates a ‘Trumping Provision’ for BBBEE Act to prevail where there are instances of conflict created by misalignment of legislation. The ‘Trumping Provision’ simply means that if there is a piece of legislation that is not consistent with the B-BBEE legislation, then the BEE legislation will trump the conflicting legislation. The B-BBEE Commission will ensure this is enforced and will monitor how the B-BBEE Act is applied by all government departments and entities,” said Ntuli.

Ntuli said that the Commission would work with government entities and other players to identify those companies that misrepresent their B-BBEE status and manipulate the application of the codes to defraud government, and ensure that they are publicized, prosecuted and ultimately excluded from doing business with any government component. Such culprits should not be allowed to continue to unjustly benefit from government procurement.

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