Inconsequential consequences. Or does it really matter

There's been so much press on this issue of fronting.  It's a hot topic and dominates the DTI and BEE Advisory Council's public ruminations.  Every time Rob talks about BEE then it's about fines and blacklisting and the wrath of all the deities etc, etc, etc (or yada, yada, yada as Seinfeld might say).

In spite of all this there are clearly very few or no consequences if you are caught fronting.  In fact the real risk is that someone threatens to expose you and goes off to the press to say all sorts of nasty things about you.  Let's go back to my post about Econobee's fronting.

It is very clear to me that a company that purports to be black owned when it is not is fronting.  The websites I referred to in that post are still up and the Econoserv CK documents still show the same two shareholders.  The DTI know about this, they have all the information.  And the consequences for the Levenstein dynasty?  Zero, nada and nyet.  In fact I suspect that Keith Levenstein knows this fact.  His model is far more effective - send rude emails to companies who have (in his opinion) been issued with the wrong scorecards, and if they don't adhere to his demands he goes to the press.  This is a very real risk to the threatened - you can imagine what the consequences would be for any company, especially a listed one.   Would allegations like these not potentially impact on that company's share price (and other stakeholders).  

This is how a loose cannon regulates an industry that the official bodies do not wish to manage.  

Yet fronting is still a scourge (according to the DTI and advisory council).  My sources tell me that the DTI will tell you (very second hand information) that they receive 3 fronting complaints a day.  Let's assume the first one started in March 2007 then this means they would have received about 3500 complaints (you figure out how I came to that number).  My sources then tell me that in fact they have only received about 60 complaints and not prosecuted a single one.

So are there any consequences to fronting or bad BEE behaviour other than naming and shaming?  I don't think so.  Another case in point is that Abacus post of mine where they patently contradicted a prior BEE certificate.  There is no recourse here - sure ABVA can make a note of this, possibly discipline them but that's not really censuring them.

It's the wild west out there, make sure your loose cannon is loaded.

Comments

[Andries Treurnicht]

ABVA cannot even disclipline them. Refer to the draft Phase I Code 000 Statement 020, section 6: "The Minister may recognize an entity as an Industry Body if that entity:...
6.2 promotes the development and maintenance of high quality and reliable BEE verification services through:...
6.2.4 the implementation of effective industry-wide complaints processing and professional conduct disciplinary mechanisms;"

This clause never made it into the "final" Codes on 9 Feb 2007. Refer to the gazetted Code 000 Statement 000: "10.6 The dti encourages the establishment of an independent Industry Body that will provide guidance to the verification industry through the development and maintenance of high quality and reliable BEE verification services."

Therefore, the title: "ABVA Director: Discipline" is like the Lesotho Minister of Ports and Harbours.