Now that's a formal title but then this is a serious post. I was unlucky enough to sit in a presentation given by Ellen Tshabalala who sits on the grand BEE council. She tried hard but her subject matter was so mundane and boring and irrelevant to the function she was speaking at that she bored the living hell out of me. What she spoke about was the "scourge of fronting" and how this was a serious concern to the BEE Council. This same sentiment has been mentioned often by Rob Davies and others who are VERY concerned about it.
I think we need to understand this concept of fronting a little better. We know for a fact that the DTI is not even vaguely concerned about Chancellor House doing BEE deals; purporting to be black enough to be a BEE partner even though it is technically and legally impossible for Chancellor House to do this - the ANC has no racial profile, neither does any other political party. This is patently a front - one that the DTI has missed. However when a white company puts up a black person as a front then everybody pays attention. I would put it to you that this is the kind of fronting that is the core focus of the BEE council. And they regard this kind of activity as a "scourge" (rhymes with urge).
Now if fronting is fraud (as Levenstein forcefully alleges) then it is a crime and a crime is defined as
An action or omission that constitutes an offense that may be prosecuted by the state and is punishable by law.
However the mere allegation of fronting is possibly more damaging than being convicted of such a crime. Take EconoBEE, they are still alleging that they are 25% black owned - even though it is patently false. They are fronting, in other words misrepresenting their black-owned status. I suggest that the mere statement of black ownership might be a misrepresentation but I have my doubts whether this has induced anyone to do business with them. Perhaps that is the why Levenstein hasn't bothered to remove this patent lie.
What would happen if a supplier to a major parastatal or SOE was accused of fronting. This would be absolutely sensational, the press and DTI and all sorts of other people would go ballistic long before the issue ever got before a court. Let's take SANRAL as a hypothetical example. They are one of the least popular SOEs in the country at the moment, the cost of tolling in Gauteng is going to bleed the already stretched consumer dry. They had to put out fires when it was found out that one of their key suppliers for the Gauteng tolling system was foreign owned. Can you imagine what would happen if it came out that one of their key suppliers was accused of fronting. This is what I would think would happen.
- The press would run this story on the front page (they did this with the foreign owned supplier)
- The poor shareholder who has been denied their shareholding will have their story aired long before SANRAL or the company gets a chance to defend themselves.
- SANRAL would be approached directly for comment. And this is where it gets embarrassing, because the press would fry SANRAL accusing of them of all sorts of things like not managing their contracts properly.
- The DA would call for the public protector to investigate this contract and every other contract that they have awarded.
- The supplier to SANRAL would be subject to the most negative press imaginable - headlines like "Racist white-owned firm dupes SANRAL".
- Don't expect any mercy from the politicians either - everyone who has an opinion will not mince their words.
- The ANC would probably appreciate the break from the press discussing their own politicians' dodgy dealings so they might stretch this out even more.
And this is all before this issue has even seen a court. This is trial by media - suddenly the truth is not relevant. It's now all about the evil supplier and their client. If the supposed supplier allows this process to go through the courts they may be vindicated legally, but the reputational damage would be very difficult to recover from.
Unfortunately this is what these kinds of allegations are all about - the more high profile you are, the more the public wants to take you down. It's no longer about the law, it moves into the public and political sphere.
I need to stress that this post is completely hypothetical, I have picked on SANRAL because they are topical, six months ago it would have been Eskom.
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