Broad-Based Black Economic Empowerment, or B-BBEE, can be an expensive exercise that requires a lot of administration and ongoing work. It can, for some, therefore be tempting to engage in B-BBEE practices, such as “fronting” that will garner you and your company the benefits of B-BBEE compliance without actually being compliant.
“Fronting is essentially fraud,” says Angie Lanham-Love, CEO of Lanham-Love Consulting, a 73.57% Black Owned Level 2 BEE Exempt Micro Enterprise that specialises in navigating B-BBEE compliance for companies and organisations across South Africa. “An example would be giving previously disadvantaged employees the title, but not the salary or power, associated with a high-level position in order to score more highly on the B-BBEE Scorecard. Another example would be when the actual value of a B-BBEE transaction differs from what is stated on the legal documents.”
So why do companies and entities engage in fronting? “The simple answer is, people think that they can avoid the upfront costs of ensuring B-BBEE compliance in their organisations,” says Lanham-Love. “The amended codes have made B-BBEE a complex and expensive exercise, and, for many, this complexity and cost can be off-putting.”
However, Lanham-Love is quick to point out the short-sightedness of fronting. “It’s a criminal offence, and one that could result in either prison time, or a fine, or in some cases, even both,” says Lanham-Love. “In addition, those convicted of fronting are also excluded from engaging in government deals for a period of ten years, as well as having their existing contracts with government cancelled. Frankly, it’s just not worth doing it.”
“Rather, engage a firm such as Lanham-Love Consulting to ensure that you are optimising your B-BBEE spend,” says Lanham-Love. “Lanham-Love Consulting believes that the financial investment you make into gaining B-BBEE compliance should equate back to your company, in either business benefit or points scoring in multiple elements.”
“As such, ours is not a ‘one and done’ process,” says Lanham-Love. “Lanham-Love Consulting works hand-in-hand with our clients on an on-going basis. We manage and implement your B-BBEE strategy together over the year. We run quarterly reviews, gap analyses, and provide board pack reporting around B-BBEE strategy and its effectiveness.”
“Furthermore, we workshop and take corrective action as and when it is needed,” says Lanham-Love. “This is the direct benefit of taking on ongoing, top down, strategic approach to B-BBEE in your business: we are continually looking for ways to enhance and increase the value of your B-BBEE spend, so that it truly is an immediate investment in your business.”
“When done right, B-BBEE supports job creation, global competitiveness and economic growth,” says Lanham-Love. “Companies that attempt ‘fronting’ very often don’t see this as being a benefit to themselves. By focusing on getting the best return on your B-BBEE investment for you, Lanham-Love Consulting is uniquely positioned to ensure comprehensive B-BBEE compliance.”
Want to get your business B-BBEE compliant, but don’t have the time or wherewithal to handle the process yourself? Speak to our experts at Lanham-Love Consulting today – we pride ourselves on creating solutions that result in additional benefits and increased compliance across multiple elements of the scorecard.