The BEE Amended Codes of Good Practice made the provision for the establishment of the Broad-Based Black Economic Empowerment (B-BBEE) Commission. This essentially introduced a body to oversee and monitor the fair implementation and application of the B-BBEE Act. The establishment of the B-BBEE Commission finally brings about accountability and will drive ethical economic transformation.
Is the B-BBEE Commission mandate legally binding?
Yes. The mandate of the B-BBEE Commission was set out in Government Gazette No 40053 Volume 612 of 2016, which was published on 6 June 2016. Subsequently, the Minister of Trade and Industry published Regulations to guide compliant processes received by the B-BBEE Commission.
Who falls under the jurisdiction of the B-BBEE Commission?
The mandate of the B-BBEE Commission applies to all private and listed organisations as well as Organs of State.
How does this affect organisations that merely have to provide an affidavit to confirm their annual turnover and ‘Black’ Ownership?
The requirement of only providing an affidavit to confirm an entity’s turnover as well as Black Ownership can create bigger fronting risks (this is why SEESA advises our clients to still provide us with all the necessary supplementary documentation to be able to ensure that the Ownership element being claimed is the true Ownership of the entity). This will enable all parties involved to prove that the Ownership status was provided based not only on an affidavit, but also on all relevant documentation.
What legal process will the B-BBEE Commission take in prosecuting organisations for misrepresentation?
Section 13 O of the B-BBEE Act deals with the offences and penalties:
- A fine that does not exceed 10% of your annual turnover, imprisonment not exceeding 10 years, or may be imposed.
- A fine or imprisonment for a period not exceeding 12 years, or both may be imposed.
In terms of this Section, it seems that the party will have to be found guilty of an offence by a court.
What is the legal obligation to report misrepresentation or fronting Practices to the B-BBEE Commission?
Section 13 O(1) of the B-BBEE Act reads as follows:
A person commits an offence if that person knowingly:
- Misrepresents or attempts to misrepresent the B-BBEE status of an enterprise.
- Provides false information or misrepresents information to a B-BBEE verification professional in order to secure a particular B-BBEE status or any benefit associated with the compliance with the B-BBEE Act.
- Provides false information or misrepresents information relevant to assessing the B-BBEE status of an enterprise to any organ of state or public entity.
- Engages in a fronting practice.
A B-BBEE verification professional, a procurement officer, an organ of state official or a public entity who becomes aware of the commission of or any attempt to commit any offence referred to in subsection (1) and fails to report it to an appropriate law enforcement agency, is guilty of an offence. This is a clear indication that any fronting practices must be reported to the B-BBEE Commission to be investigated.
ABOUT THE AUTHOR
Geralene van Wyk obtained her BA (Psychology) and LLB degrees from the North-West University. After her studies she completed her articles in Pretoria and was admitted as a practicing attorney in 2006 and a conveyancer in 2007. She joined SEESA BEE in 2011 as a legal advisor and is currently a SEESA BEE National Training Senior Legal Advisor at the Pretoria Head Office.