Business Unity SA (Busa) has welcomed the strong stance taken by Trade and Industry Minister Rob Davies and the BEE advisory council against fronting. |||
Business Unity SA (Busa) has welcomed the strong stance taken by Trade and Industry Minister Rob Davies and the BEE advisory council against fronting.
Busa also welcomed the imminent collaboration between the trade and industry department (dti) and the Special Investigating Unit (SIU) to investigate fronting allegations, it said in a statement.
Such action, together with the potential of criminalising fronting activities, would send a clear and strong signal that the practice was unacceptable and transgressors would be dealt with decisively.
Busa was equally perturbed by the high number of complaints received by both the department and the organisation, regarding incidents of fronting by some businesses and individuals, to avoid adhering to broad-based black economic empowerment policies.
Fronting took many forms, including, but was not limited to:
– Black people a company claimed were shareholders or executives while they were in reality unaware or uncertain of their role in the company;
– Black people who served in management positions but were paid significantly less and/or had less decision-making authority than their white counterparts purporting to be on the same level; and
– Manipulation and exaggeration of company data, such as the racial composition of staff or the extent of procurement from empowered entities.
“We also recognise that fronting is not only confined to the misuse of black employees or partners to unfairly improve a white-owned company’s BEE credentials,” Busa said.
Collusion also occurred, often in the form of a black person or a black-owned enterprise entering into a questionable partnership mainly and selfishly for pure financial gain, without any intent to make a real contribution to the business at hand.
Common to all forms of fronting was the intention to circumvent BEE policies, which had a detrimental effect on the economy.
“We should all be aware that transforming the socio-economic imbalances is crucial, not only as a social responsibility, but also because it is conducive towards the long-term political and economic stability.”
BEE was therefore in the interests of both business and society.
Fronting debilitated transformation by keeping sustainable black enterprises from participating meaningfully in the mainstream economy. It obstructed the meaningful transfer of skills and economic benefits to black people, and prevented those with skills from making a substantive contribution to their employer.
“Ultimately, fronting is holding South Africa back from achieving its transformation, developmental and economic goals.”
Busa called on all businesses and individuals, both black and white, to ensure full and ethical compliance with BEE requirements and policies.
Although there was currently no specific offence for fronting, the practice remained fraudulent in nature.
“In addition, we advise those entering into new business relationships to pay careful attention to the terms of contracts or shareholder agreements, to ensure that future rights and responsibilities are accurately captured in the agreement.” – Sapa
View full post on All Stories