In the early years of BEE, it was not uncommon for an old woman from a township to appear on the documents of a company she hardly knew how the logo looked like as a director. The culprits – white-owned organisations – once identified got scot-free, or unfortunate ones were exposed in the media.
The deceit of fronting is that is creates an impression that the economy is transformed when it is not. In point of fact, it is an obstacle to transformation.
But days are numbered for perpetrators. The new BBBEE Amendment Bill explicitly outlaws fronting. It prescribes stiff fines and imprisonment for shareholders and directors of companies found guilty of fronting – which typically involves the misrepresentation of a company’s black empowerment profile to get business.
In fact, the common law crime of fraud has proved insufficient in deterring the malpractice of fronting. For this reason, once the new BBBEE Amendment Bill becomes law, offenders will find themselves behind bars.