In Industry News

Broad-Based Black Economic Empowerment (BBBEE) Commission, a member of the Department of Trade and Industry, has spent the past year assessing compliance problems and has resolved to investigate companies that are involved with fronting and noncompliance with the BBBEE legislation.  

The commission was launched in 2014 to ensure that the revised BBBEE codes, as well as the BBBEE Act, are enforced and applied correctly.

“We have used the last year to investigate companies, even if complaints have not been lodged against them. We have found various challenges and problems within businesses where no complaints have been filed and we are aiming to resolve all noncompliance issues,” acting commissioner Zodwa Ntuli said on Friday.

Speaking at a stakeholder meeting on the national state of transformation, hosted by the commission, in Midrand, she noted that it would, this year, start ramping up investigations into BBBEE noncompliance.

“People do lodge complaints, but for specific issues. We are finding problems in areas where people don’t lay complaints,” she said.

She highlighted that, based on trends observed by the commission over the past year, problems within the BBBEE verification processes in business were rife.

“We are initiating thorough investigations into what is happening in that space,” she said.

Ntuli added that the commission has also officially started dealing with ownership structures that are not real, or are ‘fronted’.

“We have not received specific complaints [regarding fronting], but we have seen the trends [and will investigate],” she said.

She noted that it was especially important for companies to comply with the enterprise development requirements under the BBBEE legislation, because this facilitated entry to markets where black entrpreneurs and businesses have previously been excluded.

BBBEE Commission director of compliance Busisiwe Ngwenya, meanwhile, noted that the commission is tasked with maintaining a record of major BEE transactions, allowing it to vet details of transactions to ensure they demonstrate the required criteria.

“Once the new regulations have been finalised, the majority of BBBEE ownership transactions will need to be registered,” she said.

She highlighted that, this year, the commission will focus strongly on issuing reports and referring companies for prosecution, in addition to investigating complaints that have been filed with the commission.

“If BBBEE codes are implemented correctly, companies will not need a watchdog looking over their shoulders and making sure that they are compliant,” she said.

She pointed out that many businesses she has engaged with have said implementation of the codes is difficult.

“What I’ve found is that [the challenge of implementing BBBEE codes] lies in the willingness of . . . a company to implement the codes,” she said.

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