Section 22 of the Constitution of the Republic of South Africa states that every citizen of the Republic has the right to choose their trade, occupation or profession free from encumbrances. In other words, there should not be anything preventing them from taking part in the profession of their choosing. The practice of fronting, which has – unfortunately – been popularised with the advent of Broad-Based Economic Empowerment (B-BBEE) as well as its predecessor flies directly in the face of the spirit and purport of the transformative purpose that B-BBEE has in mind.
What are the pillars of B-BBEE?
The B-BBEE pillars are the foundations on which this principle rests. These are what inform the concept and structure of the B-BBEE process.
There are five pillars to B-BBEE, where previously there were seven. These are:
- Management control,
- Skills development and transfer,
- Enterprise and supplier development, and
- Socio-economic development.
What is fronting?
Previously disadvantaged persons acquiring ownership in economic entities is vital to transformation and redressing the previous historical disadvantages that were suffered by these classes of persons.
Unfortunately, there were – and still are – many organisations who only pay lip service to this vital step to getting South Africa well and truly on the road to transformation by circumnavigating the system to suit their own needs as well as getting the maximum B-BBEE points possible.
The B-BBEE Commission has taken drastic steps to curb and – ultimately – eliminate fronting. In early August of this year, it was stated that the Commission had initiated investigations into well-known companies with a view to investigating their possible violation of the B-BBEE Act relating to ownership structures and non-compliance with the Codes of Good Practice.
Although the process that has been followed by the Commission has been met with resistance from some quarters, the overall hoped-for outcome of the procedure is extremely laudable.Unfortunately, with any legal system there will always be those who attempt to bypass the it for their own advantage. It is hoped that with structures such as the B-BBEE Commission, these instances will become few and far between.
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