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B-BBEE Commission Disappoints
We had hopes that the B-BBEE Commission (BEE Commission) would help stop fronting when it was established by the B-BBEE Amendment Act of 2013. We hoped the BEE Commission would give guidance on interpretations and ensure consistency amongst verification agencies. Our initial excitement has proved to be in vain.

The actual commission was started in April 2016, amid great fanfare and a launch in front of 500 people. We were happy that our chairman was one of the speakers. An acting commissioner was appointed, but that person is still only in an acting position and has not been made permanent.

Nevertheless we started sending through details of transgressions to the Commission in the hope that they would take action and fronting and other issues would cease. Sadly this has proved to be a pipe dream.

We have also sent details of our interpretations to the BEE Commission. One of which has found its way into a practice guide issued by the Commission. Other issues are seriously delayed or ignored.

For example, more than a year ago we received two BEE Certificates, one dated July 2014, the other dated April 2015. The rest of the certificate was identical – same agency, same score – to the last 2 decimals. We queried the agency who informed us that they verified the company twice, 9 months apart, but in both cases used the EXACT SAME DATA. It has the effect of giving the company an extra year of using their same old certificate and same old activities. We put in a query to the BEE Commission, giving them all our research. We pointed out that we believed it was incorrect to effectively re-issue the same certificate 9 months later, and asked the commission for an opinion and to take action if there was evidence of circumvention. It should have taken no more than 10 minutes for the BEE Commission to at least frown on this activity, but they do have to go through the motions of a full investigation. Today, more than 12 months later they are still unable to issue a comment. They have asked for an additional 3 months to try to finalise this. If they cannot get through a simple issue, what chance is there that they are ever going to uncover wholesale fraud, corruption and fronting? In November 2016 we came across a BEE certificate where the white owner has now miraculously become black – or so he stated. This together with full documentation was submitted to the BEE Commission. The Commission has still not given us any feedback about this case. A JSE listed company gave us an EME certificate (I can’t name them – their shareholders will be shocked to hear that their turnover is less than R10m). This was reported to the Commission in January. As at today there has been no response from the Commission other than an acknowledgement. We have sent other documents to the Commission – from straight out forgeries and included documents from the agencies whose names were used fraudulently. No response.

At the same time verification agencies continue to operate in the dark. They get no interpretative assistance from the regulator SANAS, and little from the BEE Commission. They continue to have conflicting interpretations giving widely differing scores. One agency told us they are happy to dispense with the requirement that a company must have submitted their workplace skills plan annual training report in order to earn points for skills development, while another won’t issue the certificate even if the WSP and ATR has been submitted unless they also have a letter from the SETA analyzing their report. Some verification agencies only accept certificates for procurement purposes if they have more than 30% black woman ownership others accept it if there it at least 30% black woman ownership – this one word has huge impact for companies. There is no one to report this to, or ask for an interpretation that can be followed by the entire industry, and obtain a response in a reasonable time.

Why is this important?

Honest people are being harmed by the corruption in this country. Honest companies are losing business to dishonest competitors. A BEE certificate is easy to forge, or it is easy to corrupt someone to supply a fraudulent certificate. That is why the BEE Act has such harsh penalties for fronting and circumvention. Unfortunately the BEE Commission has been slow, or in some cases done nothing of value to stop the scourge of fronting. Inconsistent verifications and results make a mockery of BEE.

Since they started operations in April 2016, they have managed to issue 2 practice guides in 2016 (one of which was 3rd party procurement that was guided by ourselves), 3 in 2017 and one explanatory notice. We know of no charges that were laid or even letters of complaint to companies for fronting. They did indeed complain about a couple of companies that were offering training courses on how not to front, and what not to do, because it gave them a bit of bad publicity. Strangely they saw someone telling you what not to do as being a bigger issue that someone who is actually doing those things.

Employment Equity Submission window opening soon

The purpose of the Employment Equity Act, as laid out in the Act itself, is to “achieve equity in the workplace, by a) promoting equal opportunity and fair treatment in employment through the elimination of unfair discrimination; and b) implementing affirmative action measures to redress the disadvantages in employment experienced by designated groups, to ensure their equitable representation in all occupational categories and levels in the workforce.”

Companies are required to form Employment Equity Committees to perform the tasks of preparing the submission to the Department of Labour.

The worst that can happen is having a Committee that does not understand what is required by the Employment Equity Act. Lack of understanding of the members roles in the Employment Equity Committee also plays a tremendous role on the failure of the committee.

Ignorance is no longer bliss when it comes to the Act, especially with the changes in the legislation. Organizations can be fined from R1.5 million up to 10% of turnover.

Join us for an informative Employment Equity Workshop on the 27th July where we will help you be better prepared for your next submissions.

Date: 27 July, 24 August, 28 September
Title: Employment Equity Workshop
Duration: 9:00 t0 13:00
Price: R1710 (incl VAT)
Venue: 435 Rugby Avenue, Ferndale, Randburg

Lookout for our next information packed newsletter. Call us for expert help and advice to achieve successful transformation and not fall foul of the provisions of the Act.

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B-BBEE Commission Is Getting Serious About Fronting | EconoServ

January 15, 2018 |

[…] on from our previous newsletter where we criticized the B-BBEE Commission for not taking sufficient action against the scourge of […]

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