Broad-Based Black Economic Empowerment (BBBEE) is a policy framework in South Africa that aims to promote the economic transformation and address the imbalances of the past by increasing the participation of black people in the economy.

However, there are cases of “fronting” whereby companies try to circumvent the BBBEE regulations for personal gain. Fronting refers to the practise of presenting a company as though it is compliant with the BBBEE codes when, in fact, it is not.

Below are some examples of fronting:

1. Window-dressing: This involves making temporary changes to a company’s shareholding structure or management team for the purpose of appearing BBBEE compliant, without actually transferring any real control or ownership.
2. Tokenism: This involves appointing a few black employees to positions that have no actual decision-making power in the company, with the aim of creating the impression that the company is meeting its BBBEE requirements.
3. Abusive subcontracting: This involves setting up subcontractors who are actually front companies, which are controlled by non-black individuals, with the aim of acquiring contracts that require a certain level of BBBEE compliance.

The correct procedure for businesses to comply with BBBEE includes:

1. Perform a self-assessment: This involves analysing the company’s ownership, management control, skills development, employment equity, preferential procurement, and socio-economic development using the BBBEE scorecard.
2. Develop a BBBEE implementation plan: Based on the self-assessment, the company should develop a plan that addresses areas where it needs to improve its BBBEE score.
3. Execute the plan: The company should implement the BBBEE plan, monitor its progress, and make adjustments where necessary.
4. Obtain verification: The company should obtain verification of its BBBEE status from an accredited verification agency.

It is important for companies to ensure that they are genuinely implementing BBBEE and not engaging in fronting practises. The penalties for fronting are severe, and can include fines, blacklisting, cancellation of contracts, and imprisonment.