Where do I report BEE fronting?

Fronting can be reported to the B-BBEE Commission by the general public, or the Commission may instigate an investigation themselves.

Is business fronting illegal?

Is fronting a criminal offence? Under the B-BBEE Codes of Good Practice, 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.

What is fronting in a business?

Fronting means a deliberate circumvention or attempted circumvention of the B-BBEE Act and the Codes. Fronting commonly involves reliance on data or claims of compliance based on misrepresentations of facts, whether made by the party claiming compliance or by any other person.

How do BBBEE levels work?

BBBEE compliance is determined according to the number of points a business scores on the generic scorecard. The more points it scores, the higher its level of compliance. exceed a particular target, you can claim the full number of points allocated to it.

Is BBBEE compulsory?

B-BBEE compliance for companies is not a legislative requirement. Companies are not required to disclose their B-BBEE status or verify their status. It is seen as business requirement. This means that compliance with the B-BBEE act is compulsory for such entities.

What are three aspects to the BEE Act?

The three core elements of BEE are: Direct empowerment through ownership and control of enterprises and assets; Human resource development and employment equity; Indirect empowerment through preferential procurement policies aimed at ensuring black people benefit from government tenders.

What does Level 4 BEE status mean?

Level 4 – 65 to 74.99 points – 100% procurement. This level s considered to be BEE fully compliant. Level 5 – 55 to 64.99 – 80% procurement.

What does it mean when a company fronts the Bee?

In effect, fronting happens when a company misrepresents its level of black ownership or its contributions to the BEE targets set by the DTI.

What does fronting mean in the B-BBEE Act?

‘Fronting practice’ means a transaction, arrangement or other act or conduct that directly or indirectly undermines or frustrates the achievement of the objectives of this Act or the implementation of any of the provisions of this Act, including, but not limited to, practices in connection with a B-BBEE initiative.

What happens if verification agency detects BEE fronting?

If a verification agency detects a deliberate act of fronting, they are required to report this to the fraud hotline at the DTI for further investigation. If the entity is discovered to be engaged in fraud, the dti may disqualify their scorecard until corrective action is taken.

How is fronting defined by the Department of Trade and Industry?

According to the Guidelines on Complex Structures and Transactions and Fronting (previously Statement 002) of the Department of Trade and Industry (DTI), fronting is defined as a deliberate or attempted circumvention of the B-BEE Act and the Codes. The DTI defines three types of fronting practices.