BEE Commission is coming after these businesses in South Africa

The Broad-Based-BEE Commission has called for tighter legislation and greater powers to address companies that undermine transformation efforts in South Africa.

The commission briefed the media on its work over the past 20 years on Thursday (30 November), highlighting the body’s intentions of rooting out and clamping down on businesses that are fronting as BEE-compliant.

“To date, we have received 1,273 complaints that the commission has registered. Of those, 84% of them pertain to fronting,” said Lindiwe Madonsela, senior compliance manager of the BEE Commission.

The B-BBEE Act has defined fronting practices to mean transactions, arrangements or other acts or conduct that directly or indirectly undermines or frustrates the achievement of the objective(s) of the B-BBEE Act or the implementation of any of the provisions of the B-BBEE Act.

This effectively means businesses are misrepresenting their transformation standing.

The Broad-Based BEE Commissioner Tshediso Matona has slammed these findings and described them as efforts to frustrate and oppose the commission’s work and undermine transformation in the country.

“Recently, in my view, there has been an emergence of certain civil society groups that represent white interests, that have made it their business to attack transformation in South Africa,” he said.

He also lamented the slow pace of law enforcement to take action against businesses that have been found to be inviolation of the current BEE legislation.

The commission gave an update on the status of transformation across businesses in South Africa, stating that 33.9% of businesses are black-owned in South Africa – a 4.4% increase recorded in 2021.

Madonsela said while this is an improvement, she noted with concern that, from a Johannesburg Stock Exchange (JSE) perspective, there are no companies that are 100% owned by black people in the country – based on reports the commission has received.

Matona also highlighted the surge in fraudulent BEE-compliance certificates across businesses and has encouraged professionals to speak up against compliance issues and called for companies to play by the Triple BEE legislation.

Matona added that efforts are now underway to strengthen legislation to ensure the prosecution of those businesses – calling for more powers to prosecute guilty entities, which he said will drive incentives to follow legislation and make the penalties clear.

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