Financial Data
Updated 29 Sep 2020

The facts about BEE fronting

The days of listing your gardener as a director of your company to score BBBEE points are long gone. Fronting is very much frowned upon and could cost you contract and, ultimately, your company.

02 April 2012  Share  0 comments  Print

All the answers to your unique business lifestage questions

Simply put, "fronting" is the practice of misrepresenting your BBBEE status and claiming to be empowered in order to secure work, when in fact you are not.

Any business arrangement that involves only token or superficial involvement by black people or a black company can be regarded as fronting. This includes:

Window dressing - when black people are appointed or introduced to a business purely because of their colour, and are discouraged or prevented from participating in the core activities of the business.

Benefit diversion - when the economic benefits of a project that is awarded on the basis of a favourable BBBEE rating are diverted away from the black participants upon whom the rating is based.

Opportunism - this includes joint venture type arrangements with black people to boost one party's BBBEE status, but where the bulk of the work is outsourced back to the non-BBBEE company, or to its non-BBBEE-compliant suppliers.

Who is a black person?

The legally correct definition of black people includes African, Coloured and
Indian people (including black women, the disabled and people in rural areas) who are citizens of South Africa, either by birth, descent or naturalisation.

If the latter, they must have been naturalised before 27 April 1994. If any of your black employees or shareholders do not meet this definition, it could adversely affect your rating.

Rate It12345rating

Introducing the cash solutions for a growing business

Are your cash solutions supporting your growing business? Leigh Livanos, Head of Payments, Collections & Cash for Business & Commercial Banking explains how your cash solutions needs will evolve as your business expands.

Login to comment