Best line of defence is attack, just hope that your front is never exposed

Interestingly the codes themselves make no reference to fronting.  Fronting is discussed in a subsequent document (Guidelines on Complex Structures & Transactions, and Fronting  - Previously Statement 002).  Fronting is now provided with a proper definition

Fronting means a deliberate circumvention or attempted circumvention of the B-BBEE Act and the Codes. Fronting commonly involves reliance on data or claims of compliance based on misrepresentations of facts, whether made by the party claiming compliance or by any other person.

You'll notice from the definition that fronting can only be an intentional act, it cannot be by accident or mistake.  This is the reason why fraud can be included in this definition (definition taken from a MTN website).

In South Africa, fraud is defined as the unlawful and intentional misrepresentation which can lead to actual or potential disadvantage to another individual or group. The use of the term is in its widest possible meaning and is intended to include all aspects of economical crime and acts of dishonesty.

There's no shortage of definitions of fraud  in the Google world - feel free to check them up yourself.

Econoserv S A CC (2003/008557/23)

We have a situation with a certain Econoserv S A CC.  Most of you won't know who they are until you do a Google check on them.  If the internet is correct then it would almost be impossible to seperate Econobee from Econoserv S A, in certain cases Econobee is either a division of Econoserv S A, or trading as Econobee.  When we dig a little deeper into Econoserv we find out from this website that 

EconoServ is partly owned by Dinoka Investments - a majority black owned investment company which aims at investing and developing companies that work synergisticly together and have potential to grow.

They conveniently point us to the Dinoka website that states

Dinoka Investments is a majority black owned holding company that has shareholding in Econoserve (25.1%). It also offers consulting services in Enterprise Development and Human Resources.

This now tells us that Econoserve (with an extra e) is about 25.1% black owned.  If we use the modified flow through principle then it must be at least 25% black owned because of its majority black ownership, although this would not include black women ownership.   The Econoserve reference is in all likelihood a typo because there is no reference to Econoserve on CIPRO and the foot of the Dinoka webpage refers back to Econobee (I've uploaded a screenshot of the Dinoka website with this highlighted) 

Copyright © 2011 Dinoka - In association with EconoBEE Dinoka Enterprise Development- Training - EE - BEE- Business

What is also interesting is that this is not some sort of hangover from the past because the copyright notice is dated 2011, and this is the same with the Econoserve website that I referred to above. 

Copyright © 2011 EconoServ SA CC

See the screenshot here

There are now two different websites that bolster the black ownership of Econoserv S A CC.  To make sure that we are talking about the same company I then checked the co.za domain records for both econoserve.co.za and dinoka.co.za.

 Econoserve.co.za was first registered in August 2006.  The registrant is listed as 

2a_registrant          : EconoServ SA cc

2g_billingemail           : [email protected]

with the administrator as 

4a. admin                  : Levenstein, Keith

4b. admintitle             : CEO

4c. admincompany           : EconoServ SA cc

4g. adminemail             : [email protected]

Dinoka.co.za is quite similar, although registered a little later that year (November).  Again 

2a_registrant          : EconoServ SA cc

2g_billingemail           : [email protected]

with the administrator as 

4a. admin                  : Levenstein, Keith

4b. admintitle             : CEO

4c. admincompany           : EconoServ SA cc

4g. adminemail             : [email protected]

What does CIPRO say about Econoserv S A CC and who its members are?

You can never take a company's word for anything these days so I then went to look at the Econoserv SA CC CK documents.   There is NO black ownership!!! The two members of  the CC are

• KEIGH JULIAN LEVENSTEIN  (this is a typo because the ID number is the same as one Keith Julian Levenstein)
• HILARY LEVENSTEIN 

Each with a 50% "member size percentage".  For those of you who don't know who Hilary Levenstein is, you can see her on the Econobee website listed as one of the "Key Members of the EconoBEE Team".  She is Keith Levenstein's wife.

This is quite simply a GROSS MISREPRESENTATION OF ECONOSERV S A CC's OWNERSHIP STATUS  

What I don't know, but what is very easy to find out is whether this black ownership ever existed.  I have my doubts that it did - the most telling error is in the Dinoka website that tells us

 Dinoka Investments is a majority black owned holding company that has shareholding in Econoserve (25.1%)

Firstly a company, whether a CC, Pty (Ltd), or Ltd, cannot own a share in a CC, although a trust is able to own a CC.  I noticed this when the site first went live a few years ago.  My initial thought was that the CC had a trust attached to it as a shareholder - no such luck.

Secondly I could find no reference to Dinoka as a company on Cipro's records although I did find a shelf company with the same names on the Dinoka website as directors (along with a certain Christian Gouws).  This company,  SILVER MEADOW TRADING 165 (Pty) Ltd (2006/037473/07) is now deregistered.  

What exactly is Econoserv S A or Econobee's take on fronting?

If their dispactches on their website are anything to go by they are not in favour of it at all.  One blog post tells us that they have "won the battle against Fronting – the war continues!!!"  Another dispatch tells us about the consequences of using the wrong scorecard.  

EconoBEE began investigating this form of BEE fronting some months back when it discovered a corrolation between agencies participating in this devious activity and the fact that they had not yet been issued with an extension of scope to verify against those sector codes.

 And finally (although this is but a smattering of the many articles, blog posts and news articles that Econobee has published on the subject) one of their newsletters informs us that

 "Fronting is fraud"

What then to make of Econoserv S A's own black ownership misrepresentation.  To answer this I must return to the beginning of this post which defined fronting as 

a deliberate circumvention or attempted circumvention of the B-BBEE Act and the Codes. Fronting commonly involves reliance on data or claims of compliance based on misrepresentations of facts, whether made by the party claiming compliance or by any other person.

The ownership claims on these two websites cannot be regarded as some sort of mistake -

1. They weren't put there by accident.  They were put there by the websites' owners intentionally.  
2. The copyright on both websites is for 2011.  
3. There is a clear declaration of Econoserv S A CC's ownership, which includes Dinoka Investments.

In other words this must be regarded as a form of fronting, something that in my opinion is infinitely worse than a company using a DTI generic scorecard when a sector charter might apply.  

And so I must conclude with what Econobee wrote in the newsletter I referred to above, it seems that Econoserv S A CC (t/a EconoBEE) is possibly one of those 

companies (who) are gaining an unfair advantage over you, getting business they do not deserve to win.

And again, I will help Econobee 

speak out against crime, fraud and fronting.

by letting the South African public know that Econoserv S A CC/Econobee/EconoBEE is actively involved in such practices.

I'll let the reader decide whether this is fraud or not - it would seem that Econobee themselves would regard it as such.  Would you expect anything else from a company that courts controversy just for the sake of ................ courting controversy.  

A few notes

There was no shortage of concerned readers who helped me research this post.  Some not too far off the EconoBEE camp.  Thank you for your input.  Also please refer to the two screenshots I posted above if you have problems accessing these sites that point to the Econoserv S A black ownership. I also have emails from numerous people confirming that these two sites were live in April, 2011, these people sent me screenshots confirming the dates.  These are pages printed from both sites on the 12th of April, 2011. 

Comments

[קידום אתרים]

The post saws fronting indicates a talk circumvention or used circumvention of the act and the requirements. Fronting generally includes dependency on information or statements of conformity according to misrepresentations of information.

[Paul Janisch]

Agreed. It's a common law crime and in order to be prosecuted for it the state would need to demonstrate beyond a reasonable doubt that the crime occurred.
I think the perpetrator in question in this post knows that the state would not be interested in pursuing this case, hence they continue making these fraudulent statements to date.

[Jaap Marais]

Posted in Cape Business News: http://www.wcbn.co.za/dailynews/6928.html

"By Keith Levenstein a director of EconoBEE, a BEE advisory firm, discusses various types of fronting."

All Keith's examples in his article were fictional. Maybe Keith should write a novel. "50 Shades of Black". He has the imagination for it. Maybe he is fantasising daily about fronting schemes, who knows.

Well, he seems to be the expert on fronting, doesn't he?

And Paul, I disagree with another blog post of yours: Keith is not a self-made expert - no, he has practical experience in fronting... His own in-house learnership he completed with a nice Portfolio of Evidence.

So sick of this.