Tag Archives: BEE

Understanding the implications of fronting

Companies are very desperate to get tenders that they even take an illegal route just to receive BEE accreditation. When a company deliberately provides the wrong information related to BEE compliance this is called fronting and it has serious implication on the company and the business owners or directors. BEE accreditation for a company leads to more business deals and the company can also apply or receive government tenders or other sector’s projects in which they will obtain more profit to sustain their business and apply for countless tenders. Fronting has many consequences on the business and its image.

There are three types of fronting practices, opportunistic intermediaries, benefit diversion and window dressing where a company lists their black employees as shareholders to be more BEE compliant as they will earn more points on the BEE scorecard. According to the amended code of good practice fronting is a criminal offence. Companies or anyone found guilty of this act will be fined and the penalty fee will be 10% of the annual turnover and imprisonment up to 10 years for the company owners. They will also be excluded from any government deals or tenders for 10 years. For those companies that reply on government tenders to operate they will have to liquidate or close the company. To report any incidents of fronting contact the Department of Trade & Industry http://www.dti.gov.za/contacts.jsp

There is always a solution to B-BBEE! Call Sparrow FET College today – 011 673 4410/4419 to make your BEE pain go away.

Sourced from www.cenfed.co.za