The Legal Combatting of B-BBEE Fronting Practices in South Africa – Past and Present

Abstract

Broad-Based Black Economic Empowerment is critical in establishing an inclusive South African economy based on social and economic justice. However, since its inception in 2003 with the promulgation of the Broad-Based Black Economic Empowerment Act 53 of 2003, misrepresentations intended to improve an enterprise’s compliance status – fronting – have been ever-present. From 2003 to 2013, there was no clear approach to dealing with fronting, which, at least in part, led to increases in the incidence and complexity of this practice. In an attempt to deal more decisively with the issue, the 2013 amendment to the Broad-Based Black Economic Empowerment Act introduced two specific measures to combat this problem. The first was criminalising fronting practices, and the second was establishing a monitoring body, the Broad-Based Black Economic Empowerment Commission. This article briefly sketches the policy and legislative framework for implementing the Broad-Based Black Economic initiative and past practices of combatting fronting practices. This is followed by a discussion of the two measures introduced by the amendment to the Act, with a specific focus on the Commission’s role since its inception to monitor and combat fronting practices. There will also be a discussion of the various activities that the Commission reports on concerning its dealing with fronting. The article concludes with suggestions for changes to the regulatory environment that could improve the efficacy of the fight against fronting.