Public Sector
The state is the custodian of the Black Economic Empowerment and should ensure that such policies are implemented effectively to comply with its constitutional obligations to create equal access to economic opportunities.
The Broad-Based Black Economic Empowerment Act no 53 of 2003 (“The B-BBEE Act”) creates a statutory offence of fronting. Significantly, it does not limit this offence to the persons or companies who commit it, but also extends criminal liability to procurement and other officials in the employ of the state as well as verification professionals.
Officials in government departments and state owned entities are therefore vulnerable to prosecution in circumstances where:
This is onerous and places a responsibility on officials to ensure they put in place measures that would enable them to detect fraud and fronting practices and act on such to avoid criminal liability.
Using Pholosang B-eAudit will enable officials to have up to date information about B-BBEE compliance among their suppliers and will provide an effective early warning measure enabling them to act and limit their liability.
Private Sector
BEE is a business imperative. It is an important tool for creating more entrepreneurs and more jobs.
Companies that do business with the state, benefit from substantive compliance with B-BBEE. However in instances where violations of the B-BBEE Act occur, such as fronting, the penalties are harsh. Any company found guilty can be fined up to the value of the transaction or any director or person responsible person can go to prison for up to 10 years. If convicted such persons or relevant members of companies may not do business with the state for a period of 10 years.
The same provisions relating to what constitutes knowledge applies equally to businesses.
The Pholosang B-eAudit system will assist companies to effectively monitor compliance and act swiftly in instances where transgressions occur and thus limit or avoid liability
