What is fronting?
Many companies desperate for B-BBEE certification often resort to dishonest measures. This includes a practice referred to as "fronting".
Fronting means any practices or initiatives in contravention of the B-BBEE Act and B-BBEE Codes of Good Practice. Common examples of fronting include companies claiming that their secretaries, gardeners, drivers etc are directors in order to qualify for contracts fraudulently.
There are several ways in which one can tell that a company is fronting, such as:
- Black people that are listed as shareholders, executives or management, but are unaware or uncertain of their role or participation within an enterprise
- Black people identified by an enterprise as its shareholders, executives or management, but have roles and responsibilities those differ significantly from those of their non-black piers
- Black people who serve in executive or management positions in an enterprise, but are paid significantly lower than the market norm, unless all executives or management of an enterprise are paid at a similar level
- There is no significant indication of active participation by black people identified as top management at strategic decision making level
- An enterprise only conducts peripheral functions and does not perform the core functions reasonably expected of similar enterprises, etc
Under the new codes, Fronting is now recognised as a criminal offence. If found guilty, businesses could face a fine of up to 10% of their annual turnover or up to 10 years in prison. The dti encourages people and enterprises to report this business malpractice by calling their call centre on 0861 843 384.
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