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MEC warns of crackdown on BEE fronting

Gauteng MEC for Economic Development Qedani Mahlangu has warned black companies and individuals who allow themselves to be used as fronts that they could face heavy penalties.

Mahlangu, who took part in a panel discussion at the Tshwane International Trade and Infrastructure Investment Conference at the CSIR International Convention Centre yesterday, said the Department of Trade and Industry was looking at appropriate penalties for those who allowed themselves to be used as fronts.

Qedani Mahlangu MEC for Economic Developement Gauteng. Picture: Etienne Creux. Credit: Etienne Creux

The panel included executive mayor Kgosientso Ramokgopa, Solidarity’s senior researcher Piet le Roux and the Black Business Council’s chief executive officer, Xolani Qubeka.

Mahlangu said it had emerged from public hearings conducted by the government that “fronting was the order of the day”.

“Something needs to be done about this,” she said, adding that the DTI was looking at ways of curbing this practice.

The DTI recently published the Broad-Based Black Economic Empowerment Act Amendment Bill in the Government Gazette for public comment.

Companies found guilty of “fronting” could be fined between 2 percent and 10 percent of their turnover if the draft legislation becomes law. The amendment bill defines black people as “Africans, coloureds and Indians”.

Mahlangu said there was a significant number of blacks who had shares in various companies. “But they do not really own these companies,” she said.

Mahlangu said a new board of directors would take over the management of the Blue IQ, which is responsible for a number of projects, including the Innovation Hub and Gautrain. She added that a master plan was to be implemented for the Innovation Hub.

“This new board, which takes over on June 1, needs to implement this master plan,” said Mahlangu.

Ramokgopa said one of the biggest challenges facing the Tshwane Metro Council was that it now included municipalities which did not have a revenue base – Kungwini and Nokeng tsa Taemane local municipalities.

He said the council had to restructure its operations, but had to take into consideration the fact that “no employee must be worse off”.

“This means that there should not be any retrenchments,” he said.

Ramokgopa said the council was looking at the possibility of applying for a restructuring fund from the government. “We also need to look at innovative ways of funding some of our infrastructure projects,” he said.

Ramokgopa said there was a huge shortage of student accommodation in the Tshwane metro area. “We also have projects approved 10 years ago but which have not (got) off the ground,” he said.

Ramokgopa cited the Tshwane International Conference Centre, planned for Centurion, which was launched more than five years ago.

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